Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKERin the Chair]

Oral Answers to Questions — WALES

Employment Subsidy

Mr. McBride: asked the Secretary of State for Wales if he will institute a special study of the forms of employment subsidy which would be suited to Welsh industry.

The Secretary of State for Wales (Mr. Peter Thomas): I would refer the hon. Member to the reply I gave the hon. Member for Cardigan (Mr. Elystan Morgan) on 13th June.

Mr. McBride: That is a disappointing reply. Is the right hon. and learned Gentleman aware that there must be an alternative when regional employment premium, which helps to promote employment in Wales, is phased out? There will be a distribution in 1972–73of £12·9 million and in the following year of £13·1 million. Is the right hon. and learned Gentleman aware that the Industry Bill gives no definite figures in this regard? In view of the unemployment figures for Wales, the right hon. and learned Gentleman of all people must know that a sensible alternative policy to subsidise employment in Wales is called for.

Mr. Thomas: My right hon. Friend the Chancellor of the Exchequer said in his Budget statement that the regional employment premium would be phased out over a period from September, 1974. He also said that the rate and method of phasing out would be announced in the light of circumstances at the time, and after consultation with industry. The matter must be considered in the context of the whole package of regional incen-

tives which we are proposing, which has been warmly welcomed by the Welsh Council.

Mr. Elystan Morgan: Will the right hon. and learned Gentleman give a categorical assurance that every one of the forms of regional assistance administered by the Government, and those administered by the previous Government in fuller form, will be available to Wales without any inhibition in the event of our entry into the EEC?

Mr. Thomas: The only assurance I can give the hon. Gentleman is the assurance given by my right hon. Friend the Chancellor in his Budget statement, in particular when he said that the measures which we propose, and which, I repeat, were warmly welcomed by the Welsh Council in its report last week, are proposals which we intend should continue for the next eight years.

Planning Committees (Membership)

Mr. Ellis: asked the Secretary of State for Wales if he will introduce legislation preventing a member of a planning committee sitting on an application for planning consent for ground or property which he has purchased less than five years before the date of the application.

The Minister of State, Welsh Office (Mr. David Gibson-Watt): No, Sir. I consider that the present law relating to the disclosure of direct or indirect pecuniary interest by members of local authorities is adequate.

Mr. Ellis: Does not the hon. Gentleman agree that there is cause for public anxiety when a member of a planning committee is present, even though he does not take part in the discussion, during a discussion leading to the granting of planning permission for ground he has acquired recently, thereby increasing the value of the property by scores of thousands of pounds?

Mr. Gibson-Watt: Members of local authorities were reminded of their statutory obligation in this respect in the Welsh Office Circular 85/72 issued in May. If a particular case concerns the hon. Gentleman, perhaps he will write to me about it, or it is open to him, if he believes that the statutory requirements


have been contravened, to draw the attention of the police to the alleged offence.

South Caernarvonshire and North Merioneth

Mr. Goronwy Roberts: asked the Secretary of State for Wales if he will set up for South Caernarvonshire and North Merioneth an organisation similar to the Mid-Wales Industrial Development Association.

Mr. Peter Thomas: This is not a matter for me. The initiative to set up the Mid-Wales Industrial Development Association came from the local authorities themselves.

Mr. Roberts: But is it not a fact that the Association, which has proved so successful in the Mid-Wales area, has been helped from Government funds, from sums provided in the Welsh Office Estimates? Will not the right hon. and learned Gentleman reconsider his reply, especially as he has overall responsibility for the progress of industry and employment in the Principality and might himself very well take the initiative that he mentions?

Mr. Thomas: The right hon. Gentleman is quite correct. The Mid-Wales Industrial Development Association is financed by contributions from the member authorities and an annual grant from the Development Fund. An application for grant for a new body of this kind would need to be considered by the Development Commissioners. It is for the local authorities, or groups of authorities, to consider whether they should establish a promotional body of this sort. Authorities may well wish to consider that after the reorganisation of local government.

Mr. Roberts: Do I take it from the right hon. and learned Gentleman's reply to my supplementary question that if the local authorities concerned moved in the direction of the Development Commission he would look upon such an application with a kindly eye?

Mr. Thomas: The right hon. Gentleman knows that Icould not give a categorical assurance about that, but I am fully aware of the problems in the areas he mentioned, and I should be very anxious to consider, with appreciation

of the difficulties, any applications that any authorities may make.

Merthyr-Cardiff Trunk Road

Mr. Rowlands: asked the Secretary of State for Wales on what date Messrs. Rendel Palmer and Tritton were engaged by his Department to investigate possible routes for sections 4 and 5 of the Merthyr-Cardiff trunk road; and what instructions he gave to them concerning the completion date of their investigations.

Mr. Peter Thomas: October, 1965. I understand that no specific date was set for the completion of the investigations

Mr. Rowlands: Is the right hon. and learned Gentleman aware that there is unanimous support on both sides of the House for the most speedy completion of this road, which is vital to the economic well-being not only of Merthyr but of all of the Heads of the Valleys authorities? Is he further aware of the widespread dismay which results from the information which he has given us that the road will not be completed virtually until 1978 and that there will be a time lapse of nearly four years between the completion of stages 2 and 3 and stages 4 and 5? Instead of just accepting the advice that it is impossible to build the road faster because of procedural and technical reasons, will he investigate whether he can employ extra staff and speed up the procedures, even cutting a few corners, so that this vital road is built as quickly as possible?

Mr. Thomas: As the hon. Gentleman knows, I had a very interesting and rewarding meeting with him and members of the Merthyr council the other day to discuss the question of this road. I am sure that he must have been very impressed by the figures given to him which indicated that we are devoting considerable resources to building this road and are moving ahead as fast as possible. I assure him that I need no prompting from him to go ahead faster.

Tourism

Sir A. Meyer: asked the Secretary of State for Wales whether, in view of the increasing importance of the tourist industry to the Welsh economy, he will take steps to institute a scheme of awards for services to the Welsh tourist industry.

Mr. Gibson-Watt: No, Sir. The annual award of the Festival of Wales Trophy initiated by the Wales Tourist Board appears to be working well.

Sir A. Meyer: Will my hon. Friend consider that in this, as in so many other matters, the Wales Tourist Board might give a lead and example to other tourist boards? Would not this be yet another needed opportunity to raise the esteem in which the tourist industry stands and emphasise its capacity to make a year-round contribution to solving the unemployment problem in Wales?

Mr. Gibson-Watt: I agree with my hon. Friend that the Wales Tourist Board is leading the way in this country. The recipients of the trophies—one given in 1970 to the narrow gauge railways of Wales and the other given in 1971 to the Broad haven countryside unit—were very well chosen.

Mr. Gwynoro Jones: Will the Secretary of State undertake to consider whether it will be desirable for the tourist industry to qualify for the selective assistance which will be available under the proposed Industry Bill in view of the importance of the tourist industry to Wales?

Mr. Gibson-Watt: That is another question, but I am sure that if the hon. Gentleman tables it he will get an answer.

Dee Barrage

Mr. Tilney: asked the Secretary of State for Wales whether a decision on the Dee barrage is likely to be made before the start of the Summer Recess.

Mr. Barry Jones: asked the Secretary of State for Wales if he will make a further statement on the Dee crossing.

Mr. Peter Thomas: An announcement will be made as soon as possible. I hope it will be before the Recess.

Mr. Tilney: I welcome the announcement that it may be made before the Summer Recess, but is my right hon. and learned Friend aware that this Question has been asked every other fortnight for the whole of this Session of Parliament?

Mr. Thomas: I am aware of that because it is a statement of fact. I also appreciate the desire for an early statement and I hope—I cannot put it any

higher—that an announcement will be made before the Summer Recess.

Mr. Jones: On this controversial and problematical scheme, does the Secretary of State understand that the crossing scheme takes a lower priority to the further development of Shotton steelworks in relation to Deeside?

Mr. Thomas: As the hon. Gentleman knows, I appreciate the importance attached in the locality to the future of Shotton steelworks.

Retraining Facilities

Mr. Cledwyn Hughes: asked the Secretary of State for Wales if he will ask the Welsh Council to examine the question of the provision of retraining facilities, particularly in North-West Wales.

Mr. Peter Thomas: I do not think this would be appropriate. The training needs of North-West Wales have been most carefully considered and steps to meet those needs are being taken.

Mr. Hughes: Is the Secretary of State aware that that is a most disappointing and disheartening reply, especially coming from the right hon. and learned Gentleman who, as a Member who formerly represented a constituency in the area, knows the difficulties of the area as well as anyone? Is he further aware that the present facilities are totally inadequate and that there is only one retraining centre in North Wales, namely, at Wrexham, and that the men and women who go there from my area have to spend protracted periods away from home? Will the right hon. and learned Gentleman ask the Welsh Council to make an objective study of this matter and, if necessary, make representations to the Secretary of State for Employment?

Mr. Thomas: As the right hon. Gentleman knows from a letter which he received from the Minister of State at the Department of Employment, that Department has studied this matter very carefully. The right hon. Gentleman has asked about a Government training centre. He will know from the letter which he received that the main requirement in North-West Wales is to provide limited skill training, and that is being provided. Additional courses in limited engineering skills are due to start at Bangor and Llangefni in September.


Denis Ferranti Meters Ltd. is also co-operating.

Mr. Hughes: On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise this matter on the Adjournment.

Welsh Grand Committee (Estimates)

Mr. Gwynoro Jones: asked the Secretary of State for Wales if he will move for the Welsh Office Estimates to be examined by Welsh Members of Parliament on the same lines as Scottish Office Estimates are examined by Scottish Members.

Mr. John: asked the Secretary of State for Wales if he will move to enable detailed consideration of Welsh Estimates by the Welsh Grand Committee.

Mr. Peter Thomas: Consideration of any such changes is a matter within the general terms of reference of the Procedure Committee. I have no doubt that the Committee has noted these suggestions.

Mr. Jones: Surely the Secretary of State is aware that by 1975–76 the Welsh Office Estimates will amount to about £460 million to £500 million. The time available to Welsh Members to scrutinise the Estimates is woefully inadequate. In addition, the functions within the right hon. and learned Gentleman's responsibilities are closely akin to those of the Secretary of State for Scotland, and Scottish Members have much more opportunity of assessing and scrutinising the Scottish Estimates.

Mr. Peter Thomas: As the hon. Gentleman knows, the position of the Scottish Grand Committee and its consideration of Estimates is set out in the Standing Orders. What the hon. Gentleman proposes would entail amending the Standing Orders. There are appropriate channels through which these matters can be raised. If a large number of Members of the Welsh Grand Committee wish this change to be considered, there are appropriate channels through which it can be done.

Mr. John: Does not the Secretary of State realise that what we are asking, particularly in Question 27, is that he should move in the matter? I know that he might find such an arduous feat

difficult to achieve, but cannot he initiate some action which will enable the processes of Parliament to be progressively more relevant to the present range and amount of expenditure and the responsibilities being carried out by the Welsh Office?

Mr. Peter Thomas: All I am saying is that it is not appropriate at Question Time to deal with this sort of proposed change because there are appropriate procedures for it. It is a matter for the House, and should right hon. and hon. Members wish such changes to be made they should take steps through the usual channels.

Mr. George Thomas: Surely the Secretary of State is aware that he cannot shuffle off the matter like that. Wales has a right to know whether he is of opinion that we as Welsh Members are entitled to have the same opportunities of investigating Welsh statistics as Scottish Members have of examining expenditure by the Scottish Office. Since the Opposition very much want this to be done, will the right hon. and learned Gentleman say that he will not oppose it?

Mr. Peter Thomas: It is very interesting that this is the first time that the right hon. Gentleman has said to me that that is the view of the official Welsh Opposition. If that is their view, the matter can be considered, bearing in mind that the proposed changes might well involve extra staff being employed in the Welsh Office and that other problems must be considered.

Heavy Vehicles (City Roads)

Mr. Gower: asked the Secretary of State for Wales if he will take steps to ensure the provision of special entry roads into cities and large towns for heavy lorries and commercial tanker vehicles.

Mr. Peter Thomas: I am considering in conjunction with my right hon. Friends the Secretary of State for Scotland and the Minister for Transport Industries the possibility of introducing a system for the routing of heavy vehicles.

Mr. Gower: I thank my right hon. and learned Friend for that very encouraging reply, but does he not deem it a tremendous advantage that in parts of France—for example, in the large towns and cities—heavy goods vehicles are


segregated at the entrance to suburban areas and diverted from residential areas and houses?

Mr. Thomas: I was not aware of that, and I should be grateful if my hon. Friend would let me have any information he has about it.

Mr. John: Does not the right hon. and learned Gentleman also realise that much of the most dislocating effect is on small towns such as Llantwit Major where heavy vehicles go through narrow streets completely disrupting the life of communities as well as endangering the lives of the inhabitants, and that more must be done to bypass such towns to save people from inconvenience and danger?

Mr. Thomas: I am fully aware of the difficulties in many towns, and it is one of the reasons why we are pressing ahead as fast as resources allow with such improvements as bypassing towns.

Mr. Gower: asked the Secretary of State for Wales what study he has made of the special entry roads into cities and large towns in Western European countries for heavy lorries and commercial tanker vehicles; and what conclusions he has reached.

Mr. Peter Thomas: I have made no specific study of the position in Western Europe, but I will be glad to look into any particular point my hon. Friend has in mind.

Mr. Michael Foot: Does not the right hon. and learned Gentleman think that if his hon. Friend the Member for Barry (Mr.Gower) is so concerned about the ravages that might be done by these heavy lorries he should not have voted so assiduously for the passage of the European Communities Bill, and will the right hon. and learned Gentleman confirm that he and his hon. Friends voted against a Clause designed specifically to retain some remnant of parliamentary control in this House to try to deal with this question?

Mr. Thomas: The matter which is concerning my hon. Friend relates to special entry roads into cities and large towns in Western Europe, and this is a matter about which I am anxious to learn. As I told my hon. Friend, I shall be glad to look into any point that he has in mind. If we can benefit from anything

that my hon. Friend has seen happening in Western Europe to assist in overcoming this problem, naturally we shall be only too glad to look into the matter.

Mr. Gower: Is my right hon. and learned Friend aware that, contrary to the advice given by the hon. Member for Ebbw Vale (Mr. Michael Foot), the safeguards for which I ask are provided within France, which is one of the countries in the Common Market?

British Steel Corporation

Mr. Roy Hughes: asked the Secretary of State for Wales what recent discussions he has had with the British Steel Corporation concerning matters of joint concern.

Mr. Peter Thomas: I keep in close and regular contact with the British Steel Corporation about the steel industry in Wales.

Mr. Hughes: In the defence of Welsh interests, the right hon. and learned Gentleman seems to display all the eloquence of a Trappist monk. Is he not aware that in the past two years more than 3,000 redundancies have been notified in the Newport area alone and that many more are on the way? What is he doing about it? Why does not he at least make a simple gesture by placing Newport in the development area and thereby give some hope to our people?

Mr. Peter Thomas: I can tell the hon. Gentleman that the corporation's investment has been stepped up substantially from £80 million in 1969–70 to£265 million this year, and that Welsh projects will account for about one-third of the corporation's investment in 1972–73.

Mr. Barry Jones: Since it appears likely that the British Steel Corporation will announce the closure of Shotton's 12 open hearth furnaces, which at present provide 7,000 jobs, will the right hon. and learned Gentleman guarantee that there will be no announcement about this possible closure while the House is in recess?

Mr. Peter Thomas: When an announcement is made about the British Steel Corporation's long-term plans, which of course, will take into account regional aspects, certainly I hope that a statement about the Government's decision will


be made in this House. As for Shotton, I can tell the hon. Gentleman that no decisions have been taken.

Mr. Cledwyn Hughes: Is the right hon. and learned Gentleman aware that the loss of 7,000 jobs in North Wales would be disastrous for the area. Will he tell us what steps he is taking to avoid that catastrophe?

Mr. Peter Thomas: As the right hon. Gentleman may or may not know, I have had meetings with representatives of local authorities in the area and of both sides of industry. I have discussed the matter with the British Steel Corporation. I do not think that I can add anything to what I have said, namely, that no decision has been taken by the British Steel Corporation about the future of Shotton.

Sir A. Meyer: Can my right hon. and learned Friend assure the House that in considering this matter the Government will not allow mere book-keeping considerations to be decisive?

Mr. Peter Thomas: The Government have said that the decision initially must be one for the British Steel Corporation. Clearly the Government will then have to consider the corporation's representations, and the Government have said that regional considerations will be taken into account.

Mr. Michael Foot: The right hon. and learned Gentleman has referred to the announcement that the British Steel Corporation will make of its long-term so-called strategic plans for the industry. Since he has said that this is initially a matter for the British Steel Corporation, will the Secretary of State say what representations his Department has made about the proposed figure of 28 million tons steel production in this country? Has not the Welsh Office made representations against that figure? If the industry were to be kept down to such a figure, it could be disastrous for the industry as a whole and for Wales in particular.

Mr. Peter Thomas: The figure was not fixed at 28 million tons; there was a range. It was accepted by the British Steel Corporation.

Mr. Foot: Does not the Secretary of State agree that the figure of 28 million

tons was put forward not by the British Steel Corporation but by the Government? I am asking what representations the Welsh Office made about that figure.

Mr. Peter Thomas: The hon. Gentleman is wrong. The figure, which was originally an inflated figure suggested by the British Steel Corporation, was, after the British Steel Corporation had gone into the matter more carefully, revised to between 28 million and 36 million tons.

Mr. George Thomas: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of those replies, I give notice on behalf of my right hon. and hon. Friends that I intend to pursue the matter further on the Adjournment.

Commission on the Constitution

Mr. John: asked the Secretary of State for Wales whether he will publish the evidence submitted by individuals and organisations in Wales to the Commission on the Constitution.

Mr. Peter Thomas: This is entirely a matter for the Commission. So far, three volumes of evidence relating to Wales have been published and I understand that a further volume, which will include the remainder of the material in respect of Wales, will be published in the Autumn.

Mr. John: Does not the right hon. and learned Gentleman realise that the evidence submitted is a matter of vital concern when people consider the efficacy of the Commission's recommendations? Is there not an equal case, in advance of the report, for publishing a popular document putting forward the evidence submitted on behalf of each of the bodies so that discussion of that report can be informed and enlightening?

Mr. Thomas: There is a lot in what the hon. Gentleman says. However, I remind him that this is a Royal Commission, and the publication of these reports is a matter for the commission. So far, three volumes of evidence relating to Wales have been published. I understand that a further volume will be published in the autumn

Hospital Services (Rhymney Valley)

Mr. Fred Evans: asked the Secretary of State for Wales if he will ensure that the Welsh Hospital Board carries out the reorganisation of hospital services in the


Rhymney Valley in such a way as to provide a full range of services at the Caerphilly Miners' Hospital, in line with the discussion he had with the Rhymney Valley Hospital Action Committee and his letter of 4th June, 1971.

Mr. Gibson-Watt: I am satisfied that the Welsh Hospital Board are implementing the pattern of services approved in the Welsh Office's letter of 4th June, 1971.

Mr. Evans: Is the hon. Gentleman aware that a letter written to the Secretary of State for Wales on 23rd June by the chairman of Caerphilly urban district council, who also represents the Rhymney Valley Hospital Action Committee, expresses utter dissatisfaction with the way in which the Welsh Hospital Board intends to implement the letter of the Secretary of State of 4th June, 1971? Is the hon. Gentleman aware, further, that there is considerable bitterness in the letter to which I have referred, which charges practically a breach of faith? Will the hon. Gentleman accept from me that in the whole of the Rhymney Valley the community is filled with bitterness about what is considered to be a situation in which it has been sold down the river, and that it equates this kind of action at a more local level with the larger elements of betrayal in this Government's general policy on prices and the Common Market and in many other directions?

Mr. Speaker: Order. I must point out that lengthy supplementaries simply mean that fewer hon. Members have an opportunity to ask questions. I must ask hon. Members to be brief.

Mr. Gibson-Watt: The hon. Gentleman's concluding remarks vitiate the interest that he rightly has in the hospital services in Caerphilly. It has never been envisaged that a district general hospital should be in Caerphilly, however. I myself have visited the hospital and have had a number of discussions. The hospital board has had discussions with the action committee. Further talks are being arranged between the hospital board and the action committee. Naturally I hope that the best answer will be found for Caerphilly.

Bevan Report (Hospital Services)

Mr. Nicholas Edwards: asked the Secretary of State for Wales what pro-

gress has been made with the implementation of the recommendations of the Bevan Report on the hospital service in Pembrokeshire.

Mr. Gibson-Watt: Nine recommendations have been implemented and two await the building of the new hospital at Withy bush. The remaining six recommendations are under continuous review, although there are problems in certain instances. I will write to my hon. Friend about this.

Mr. Edwards: Will my hon. Friend tell me what action is being taken to give permanent hospital appointments to GPs, to ensure that the orthopædic consultant holds at least four sessions a week in Pembrokeshire, and to ensure that the casualty department is headed by a consultant surgeon with adequate supporting staff, as recommended in the report?

Mr. Gibson-Watt: I shall have to write to my hon. Friend about the first part of his question.
On the second part, the Welsh Hospital Board is having discussions with the surgeons at the hospital to settle the detailed working arrangements for a new consultant when appointed. When agreement has been reached, the post will be advertised.

Centre for International Affairs

Mr. Michael Roberts: asked the Secretary of State for Wales what requests he has received for Government assistance in the establishment of the Welsh centre for international affairs; and if he will make a statement.

Mr. Peter Thomas: A suggestion has been put forward that a Minister should perform an opening ceremony. I am awaiting a further approach by the sponsors of this proposed establishment.

Mr. Roberts: I am grateful to my right hon. and learned Friend for that reply, because I am sure that it will be appropriate as a good send off. However, I must confess that I had something more tangible in mind when I spoke of assistance. Does my right hon. and learned Friend agree that the failure of both central and local government to provide funds to establish an effective secretariat would be a shabby rebuff to the Davies family who have done so


much for both Wales and international understanding?

Mr. Peter Thomas: I have not so far received any request for financial help. Therefore, I feel sure my hon. Friend will understand that I cannot comment any further.

Mr. George Thomas: In view of the very good response there has been from Welsh people to the appeal for funds for this international centre, will the Secretary of State undertake to look sympathetically at such an appeal when it comes to him, which I feel sure is likely?

Mr. Peter Thomas: As I said, I have not so far received any request for financial help. Therefore, I cannot comment hypothetically.

Transport Services (Cardiganshire)

Mr. Elystan Morgan: asked the Secretary of State for Wales if he will request the Welsh Economic Council to make a survey of areas in Cardiganshire which are not at present served by any public transport services and of the economic effects to those areas of the absence of such services.

Mr. Peter Thomas: The Welsh Council has, with my full agreement and support, already commissioned a major research project on passenger transport needs throughout Wales. Work started in June.

Mr. Morgan: Will the Secretary of State acknowledge that there is a special problem in places such as Cardiganshire where over half the population live in areas where there is virtually no public transport service at all and that this has the effect of bringing about a complete disintegration in the life of the outlying communities? Is he prepared, therefore, to set up a pilot survey in an area with problems as acute as Cardiganshire?

Mr. Thomas: I accept that Cardiganshire has special problems, but special problems in Wales are not confined to Cardiganshire. This special study which has been set up will involve a wide-ranging look at the whole pattern of communications in Wales, including Cardiganshire, and I hope that it will help to establish criteria on which future discussions can be based.

Road Tankers (Liquid Chemical Cargoes)

Mr. McBride: asked the Secretary of State for Wales if he will institute a special study of the hazards to health, life and limb, arising from accidents to, or collisions between, the increasingly large number of road tanker vehicles now being used in the transportation, in Wales, of volatile liquid chemical cargo.

Mr. Peter Thomas: No, I see no need for a separate study of the problem in Wales. The matter falls within the field of review of the Standing Advisory Committee on Dangerous Substances which has it under active consideration.

Mr. McBride: That reply indicates that safety is not within the purview of the right hon. and learned Gentleman. Is he aware that he cannot recommend to his right hon. Friend too soon that specified road routes be used in Wales for specified cargoes of liquid chemicals and petrol? Is he further aware that he should resist any increase in the axle load of such vehicles, be they British or continental juggernauts, which will come when we are vassals of France? Will he recommend to his right hon. Friend that all road tanker vehicles, British or foreign, be subject to the highest standard of mechanical efficiency?

Mr. Thomas: Safety in Wales is obviously a matter of concern to me, but the conveyance of dangerous substances by road is a matter for my right hon. Friend the Home Secretary. The conveyance by road of a large number of volatile liquid chemicals is already controlled by regulations under the Petroleum (Consolidation) Act, 1928. It is our intention that further substances should be brought within control as soon as detailed requirements have been formulated by the Standing Advisory Committee on Dangerous Substances. I see no need for a separate study of the problem in Wales.

Mr. Gower: Will my right hon. and learned Friend note that, apart from dangerous substances, there is acute anxiety about these huge vehicles which many people feel should be restricted in speed? They are restricted in speed in several continental countries. I hope that my right hon. and learned Friend will look at this matter.

Mr. Thomas: I am aware that there is anxiety about these large vehicles. It is probably for that reason that my hon. Friend had two Questions down today.

Penygroes, Caernarvonshire

Mr. Goronwy Roberts: asked the Secretary of State for Wales if he will pay an early visit to Penygroes, Caernarvonshire, to discuss local questions with the local authorities.

Mr. Peter Thomas: I have no immediate plans to visit Penygroes, but I will bear the right hon. Gentleman's suggestion in mind.

Mr. Roberts: I thank the Secretary of State for his reply. Everyone in Caernarvonshire hopes that he will take an early opportunity to visit this important centre of the former slate industry in Wales and that, when he visits the township, he will bring with him hope for early occupancy by a suitable tenant of the excellent factory in Penygroes that has been standing idle for two years?

Mr. Thomas: I agree with the right hon. Gentleman that occupancy of that factory in Penygroes would probably transform that situation there. As he knows, a complete renovation of the factory has recently been carried out at a cost of £44,000, which should make it more attractive to prospective occupants. I assure him that the factory is being brought to the attention of industrialists by the Department of Trade and Industry.

Road Building (Benefits)

Mr. Rowlands: asked the Secretary of State for Wales what study his Department has carried out into the developmental benefits of new road building in Wales.

Mr. Peter Thomas: The developmental effect of new road building is always taken into account in the planning of new roads.

Mr. Rowlands: Is the Secretary of State aware that one of the major recommendations of the Estimates Committee preceding the last election was that his Department should set up such a study and investigate the return and developmental benefit of new roads as an important weapon in the armoury of the Welsh

Office and other regional Departments in obtaining even greater funds for road building, not only to relieve immediate congestion but to create a new pattern of industrial development throughout South Wales?

Mr. Thomas: I am aware of that recommendation. No specific study has been undertaken, but the wide-ranging Government-financed study of transport in Wales currently being done at Aberystwyth will help to shed further light on the matter.

Improvement Grants

Mr. Cledwyn Hughes: asked the Secretary of State for Wales what guidance is given to local authorities on the payment of improvement grants.

Mr. Gibson-Watt: General advice is given by departmental circulars. The Welsh Office is glad to give individual local authorities guidance on particular points of difficulty.

Mr. Hughes: Is the Minister of State aware that, whatever the merits of this problem, one must deplore the violent and arrogant demonstration which took place in an auction sale at Caernarvon last Friday? Is he further aware that many of us have been concerned about this problem for a very long time and that we do not need a demonstration to draw to our attention the fact, or to instruct us, that the best way of dealing with a matter of this kind is through constitutional means? Will he therefore bring to the notice of local authorities the desirability of ensuring that these grants go to people who need first homes and that grants to people who need holiday homes should be witheld until the demand for first homes in Wales has been met?

Mr. Gibson-Watt: I certainly share the concern referred to by the right hon. Gentleman in the earlier part of his supplementary. As he well knows, the policy being adopted by this Government is the same as that adopted by the Labour Government. I remind the right hon. Gentleman that local authorities give grants to put in only standard amenities, such as a bath and hot and cold water. It is surely right that every dwelling should have these amenities, however infrequently it is used.

Mr. George Thomas: Is the Minister of State aware that the runaway increase in land and property prices has transformed the situation and that it is no use his referring to what happened two years ago. Is he further aware that while all decent-minded Welshmen object to the storm troopers of the Welsh Language Society, none the less they expect the Government to introduce adequate control over the prices of land and property to ensure that local inhabitants are able to compete to buy houses in the locality?

Mr. Gibson-Watt: Yes, Sir. I was made aware of the right hon. Gentleman's views on this matter in his article in the LiverpoolDaily Post this week, but I am not certain that the suggestions which he put forward would solve the problem.

Mr. Goronwy Roberts: May I, as the Member for Caernarvon, strongly endorse what my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) said about the repugnance with which the general population of the area and, indeed, the whole of Wales, regard this kind of demonstration on a matter which most of us feel is in need of reform?
The 1969 Act, which was passed by the previous Government, is an excellent Act but, in the light of experience, as my right hon. Friend the Member for Cardiff, West (Mr. George Thomas) said, is it not time that the abuse and misuse of these improvement grants were attended to and the money made available to local authorities to purchase improvable houses with a view to their being sold or let to young couples who want to occupy them all the year round?

Mr. Gibson-Watt: I agree with the first part of the right hon. Gentleman's supplementary. With regard to the second part, as I have said on previous occasions from this Box, it is not a straight-forward matter and it is not easy to find an answer that will please everybody.

European Economic Community

Mr. Gwynoro Jones: asked the Secretary of State for Wales what will be the rank of the senior Welsh Office representative on the British delegation to the European Economic Community in Brussels.

Mr. Peter Thomas: The British delegation in Brussels is representative of the

United Kingdom as a whole and there are no special territorial appointments.

Mr. Jones: Is the right hon. Gentleman aware that one reason for the opposition of the Welsh people to the Common Market is the increasing remoteness and undemocratic method of decision-making? Will the right hon. and learned Gentleman assure us that one crumb of comfort will be the appointment of an Assistant Commissioner for Wales?

Mr. Thomas: As I said, there are no special appointments in respect of territorial interests. The Welsh Office will not be specifically represented on the delegation, nor, for the same reason, will the Scottish Office.

Sports Grounds (Safety Standards)

Mr. Roy Hughes: asked the Secretary of State for Wales what recent discussions he has had with the Chairman of the Welsh Sports Council in relation to safety standards at sports grounds.

Mr. Gibson-Watt: Questions of crowd safety at sports grounds are dealt with by my right hon. Friend the Secretary of State for Home Affairs. He is consulting the Sports Council for Wales on this topic.

Mr. Hughes: Does the hon. Gentleman appreciate that the introduction of VAT will be highly detrimental to sport in Wales? Does he appreciate, too, that the four English League soccer clubs have considerable expenditure on their hands due to ground improvements as a result of the Wheatley recommendations, and that they cannot afford VAT as well? Will the hon. Gentleman seek to exempt Welsh Rugby from this tax, because it is strictly amateur in character and relies so much on voluntary labour?

Mr. Gibson-Watt: VAT is a matter for the Chancellor of the Exchequer.

Public Health Inspectorate

Mr. Fred Evans: asked the Secretary of State for Wales if he will appoint to the Welsh Office staff a person qualified to act in liaison with the Public Health Inspectorate in Wales; and if he will make a statement.

Mr. Gibson-Watt: I am satisfied that adequate arrangements already exist in the Welsh Office for liaison with local


authorities on matters which are the concern of the Public Health Inspectorate.

Mr. Evans: Will the hon. Gentleman accept that the Public Health Inspectorate does not agree with that viewpoint? Is he not aware that increasingly the inspectorate is playing an important part in the environment of Wales? It took a major part in the sample housing survey in Wales. It has onerous duties in connection with noise pollution, its measurement and the initiation of action to deal with it. It will become increasingly important in consumer protection through the food and drugs legislation. Does the hon. Gentleman accept that though professional organisations in local government in Wales have a direct link with the Welsh Office, this does not apply to the Public Health Inspectorate? Will he please give further consideration to this matter?

Mr. Gibson-Watt: The Welsh Office is glad to have regular contacts with the Association of Public Health Inspectors and to discuss matters of common concern, but I see no necessity to appoint a special liaison officer, nor am I aware that difficulties have arisen under the present arrangements or that my right hon. and learned Friend is lacking in appropriate advice.

Roads (Expenditure)

Mr. Nicholas Edwards: asked the Secretary of State for Wales what was the total expenditure in Wales in the financial years 1970–71 and 1971–72 on compensation and the acquisition of land for motorway and trunk road construction in Wales.

Mr. Peter Thomas: Approximately £880,000 in 1970–71 and £1,600,000 in 1971–72.

Mr. Edwards: Does not my right hon. and learned Friend agree that it would be right, both from the point of view of equity, and also because of the need to speed up the road-building programme, to pay adequate compensation to those who suffer from proximity to these new roads? Will he therefore consult his right hon. Friend the Secretary of State for the Environment with a view to taking early action?

Mr. Thomas: As my hon. Friend knows, the Government have for some

time been engaged in considering the whole of these wide and complex issues. He will appreciate that until an announcement is made on this matter I cannot make any statement.

Mr. Rowlands: Is the right hon. and learned Gentleman aware that if he were to give approval to some of the more extravagant proposals submitted for building urban motorways in Wales the cost of land acquisition as well as the loss of homes would increase and multiply in years to come, whereas the money could be spent on providing better roads and developing the industrial economy of South Wales?

Mr. Thomas: Considerations of that kind are borne in mind.

Oral Answers to Questions — NATIONAL INDUSTRIAL RELATIONS COURT

Mr. Arthur Lewis: asked the Attorney-General whether he is now able to give the costs of the National Industrial Relations Court since the stated date when it commenced its activities under the National Industrial Relations Act.

The Attorney-General (Sir Peter Rawlinson): I refer the hon. Member to the answer I gave to the hon. Member for Bolsover (Mr. Skinner) on 4th July.—[Vol. 840, c.99.]

Mr. Lewis: That does not give us any information at all. Surely the Attorney-General can give us some information? When he does publish the details, which are readily available, will the figures include the costs of the Official Solicitor's intervention?

The Attorney-General: The hon. Gentleman has obviously not looked at the answer that I gave, which sets out the total cost involved in the setting up and running of the National Industrial Relations Court.

Mr. Lewis: But not the Official Solicitor.

Oral Answers to Questions — ALIMONY

Mr. Dalyell: asked the Attorney-General how many prosecutions took place in May, 1972, or any convenient recent period, against men who have


failed to pay alimony granted by court order.

The Attorney-General: I would refer the hon. Member to the answer I gave him on 19th June, 1972.—[Vol. 839, c. 25–26.]

Mr. Dalyell: And many other answers. The situation remains unsatisfactory. In these circumstances, could not the Inland Revenue be persuaded to use its tracing facilities?

The Attorney-General: The hon. Gentleman asks me about prosecutions. I indicated last time that these are not prosecutions. The hon. Gentleman refers to alimony. If he has in mind, as I think he has, matters of maintenance, no figures for judgment summonses in 1972 are available. The best figure available in 1970 about the number of men committed to magistrates' courts is 2,962.

Sir Elwyn Jones: My hon. Friend asked about tracing arrangements. Is the Attorney-General satisfied that the Departments concerned co-operate fully in this respect? Most hon. Members have received complaints about the difficulties of wives, whose children are being abandoned, not being fully helped in attempting to trace their defaulting husbands.

The Attorney-General: I appreciate that it is increasingly difficult to trace husbands, particularly one determined to disguise where he lives or where he is employed, but I assure the right hon. and learned Gentleman that every effort is being made. It nevertheless remains a difficult task.

Oral Answers to Questions — OFFICIAL SOLICITOR

Mr. Cordle: asked the Attorney-General on whose instructions the Official Solicitor intervened in the case of the three dockers held to be in contempt of the National Industrial Relations Court.

The Attorney-General: The Official Solicitor acted on his own initiative in the circumstances set out in the statement made by the Master of the Rolls on Monday, 19th June.

Mr. Cordle: Is the Attorney-General aware that Lord Denning, Master of the Rolls, made a statement on 19th June to

the effect that the Secretary of the NIRC had asked the Official Solicitor to appear on behalf of three dockers, yet theDaily Express of 17th June reported the Official Solicitor as saying
It was all my own idea.
In that case, perhaps my right hon. and learned Friend will tell us who was right. If the Official Solicitor was right, perhaps the Attorney-General can define the Official Solicitor's function, because the dockers themselves did not ask the Official Solicitor to intervene on their behalf.

The Attorney-General: I can only refer my hon. Friend to the statement which was formally made by the Master of the Rolls on 19th June from the court which stated and recited how it came about that the court invited the Official Solicitor to intervene in the matter. The Official Solicitor's duties are to intervene when asked to do so by the court or in pursuance of a general direction which obliges him to review all cases of committal for contempt and to take such steps as seem to him to be proper.

Mr. Orme: Is the Attorney-General aware that the intervention of the Official Solicitor has caused great consternation in this country, and tends to bring the law into disrepute, because many people were unaware even of the existence of that gentleman? Is the right hon. and learned Gentleman not also aware that the Official Solicitor's evasive answers following his intervention give many people the impression that he was pressurised to intervene on behalf of the dockers; and that we are entitled to know who brought the pressure to bear on the gentleman?

The Attorney-General: As I said, the Master of the Rolls—namely, the court—asked for the intervention of the Official Solicitor; he and he alone was so responsible, and it was with his knowledge and with his knowledge alone that the request was made. In matters of contempt, the Official Solicitor always examines the papers and on suitable occasions intervenes. On this occasion he intervened solely at the request of the court itself.

Mr. Arthur Lewis: asked the Attorney-General whether he will publish in the Official Report a list of the


official discussions held by the Official Solicitor, in the week commencing Monday 12th June, 1972; and with whom such discussions were held.

The Attorney-General: No, Sir. During the week in question the Official Solicitor held no discussions with any Government Department or agency.

Mr. Lewis: Is the Attorney-General aware that I happened to be waiting with the dockers at Chobham Farm in my constituency for the tipstaff to arrive and that when he failed to arrive the dockers said, "The whole of the law is crooked"? To prove that they are wrong, can we be assured that today, when there is a similar incident happening again, the Official Solicitor is to intervene?

Mr. Speaker: Order. That supplementary question does not arise from the Question.

The Attorney-General: I was not aware where the hon. Gentleman was at that time. I am only always aware that he is here when it is my turn to answer Questions.

Mr. Heffer: Will the right hon. and learned Gentleman agree that whether or not there were discussions on the part of the Government—and obviously there were discussions on the part of the Government—the intervention of the Official Solicitor saved the country from a very severe dock strike brought about by the ridiculous application of the Industrial Relations Act? Incidentally, most people had not even heard of the Official Solicitor until that Monday. Is it not clear that this gentleman will have a lot more work in the near future in order again to avoid a national dock strike unless the Government take into account the views of the TUC, and suspend the Industrial Relations Act pending its abolition?

The Attorney-General: The hon. Gentleman is expressing his own point of view which he has expressed in debate and will doubtless express again. I am not responsible for the court, or for the actions of the Official Solicitor. The Official Solicitor, I repeat, acted on the instructions and at the request of the court, and of the court alone.

Oral Answers to Questions — LEGAL AID

Mr. Clinton Davis: asked the Attorney-General when the Government propose to review the financial limits of eligibility for civil legal aid.

The Attorney-General: The Legal Aid Advisory Committee, in its 21st report which was published on 14th June, recommended increases in the capital limits of the Legal Aid Scheme. These recommendations are under consideration. The Committee stated that it intended to consider the income limits with a view to making recommendations in its next report.

Mr. Davis: Can the right hon. and learned Gentleman indicate when the next report is likely to be published, and when the Government intend to act on the report on capital limits? Is he aware that a great number of hardships are caused because the income limits are so stringent according to our current living standards?

The Attorney-General: Consultations are going on at present. As the hon. Gentleman appreciates, the report was received only on 14th June. Some of the recommendations would involve legislation. I cannot at present advise him when we can expect the next report of the advisory committee.

Mr. S. C. Silkin: Is the Attorney-General aware that there is still time—though maybe only just—for the Legal Advice and Assistance Bill to be amended in another place? We asked for the Bill to be amended to increase these limits when it was in this House. Will the Attorney-General take steps to see that this is done in another place rather than wait perhaps another year?

The Attorney-General: As I said, these recommendations were published only on 14th June and would increase the financial limits very considerably in certain circumstances. In those circumstances, I think that it is unreasonable to suggest that steps could be taken so swiftly.

Mr. Clinton Davis: asked the Attorney-General what proposals he has for a national advertising campaign in connection with the implementation of the Legal Advice and Assistance Bill.

The Attorney-General: The Law Societies of England and Scotland are formulating, in consultation with the Central Office of Information, proposals for a national campaign advertising the provisions of the Legal Advice and Assistance Bill.

Mr. Davis: Does the Attorney-General's Department intend to offer some financial assistance in all this, or is some other Government Department prepared to do so? Unless substantial publicity is afforded to many of these valuable new proposals, the take up is likely to be very low indeed, and that would impair the whole efficacy and value of the scheme.

The Attorney-General: I agree on the importance of publicising the scheme, and proposals are being considered at the moment for advertising in the national Press, for television advertising and for a poster campaign. All these matters are under active consideration. I repeat that I share the hon. Gentleman's view about the importance of seeing that they are properly publicised.

Oral Answers to Questions — OBSCENE PUBLICATIONS ACT

Mr. Dalyell: asked the Attorney-General if he will make a statement on the official statement issued by his Department in a national newspaper on the operation of the Obscene Publications Act.

The Attorney-General: I have nothing to add to the two statements issued by my Department and published on 23rd and 28th June.

Mr. Dalyell: What has the Attorney-General's Department learned from its bout inThe Times with Bernard Levin?

The Attorney-General: I am sorry, but I cannot hear the hon. Gentleman.

Mr. Dalyell: Has the Department come to any conclusions as a result of its confrontation with Mr. Levin inThe Times?

The Attorney-General: The object of the statements was to correct gross errors in fact and misunderstandings of law and of duty in public prosecution.

Oral Answers to Questions — MAGISTRATES (WALES)

Mr. Ellis: asked the Attorney-General how many magistrates in Wales have been asked to resign in the last 12 months.

The Attorney-General: During the past 12 months one magistrate in Wales has resigned as the result of a request from my noble Friend to do so. In one other case my noble Friend was content to accept an undertaking after receiving a personal explanation from the magistrate concerned.

Mr. Ellis: Is the right hon. and learned Gentleman aware that correspondence made publicly available in the magazinePlanet 12 between the Lord Chancellor and the magistrate concerned at least justifies an inquiry into the resignation? Will the Attorney-General ask his noble Friend to think again, and initiate an inquiry into the whole affair by independent jurists?

The Attorney-General: I do not think that that is necessary. As I explained, one magistrate, following the case which the hon. Gentleman probably has in mind, resigned, and the other gave an undertaking which was acceptable.

Mr. George Thomas: Is the right hon. and learned Gentleman aware that the Lord Chancellor has the support of the overwhelming body of Welsh people in the action that he took in this case?

The Attorney-General: I am grateful to the right hon. Gentleman for that comment. It is unnecessary to state how important it is, but it is important that such magistrates should carry out their duties in relation to the law and their oath.

Oral Answers to Questions — QUESTIONS TO MINISTERS

Mr. McBride: On a point of order, Mr. Speaker. The matter I wish to raise concerns the nature of the reply from the right hon. and learned Gentleman the Secretary of State for Wales—

Mr. Speaker: Order. The hon. Gentleman has already defeated himself. He cannot raise on a point of order the nature of a reply. The nature of a reply is not a matter of order.

NORTHERN IRELAND

The Secretary of State for Northern Ireland (Mr. William Whitelaw): I will, with permission, make a further statement about Northern Ireland.
I wish to apologise at once to the Opposition for not giving the general courtesy of a statement to them in time. I am afraid that I have only just this moment arrived back from Northern Ireland on the aeroplane.
The House will have heard that the cessation of hostilities in Northern Ireland announced by the Provisional Wing of the IRA of which I told the House on Thursday, 22nd June, was ended by it on Sunday evening after fire had been opened on British troops. Security forces had been subjected for some time to assault short of shooting, arising out of communal argument about housing, a matter that had already been the subject of anxious discussion and about which a further meeting had been arranged. It was only after the Army units had been fired on that they returned fire.
This incident has been seized on by the Provisional Wing of the IRA as a reason for ending its declared truce.
That truce had been discussed by me with some leaders of the Provisional Wing of the IRA on 7th July. I arranged to see them because I have, as the House well knows, discussed these grievous Northern Ireland problems with representatives of many shades of opinion. Any action that I could take that would save life or avoid further damage to property seemed to me should be taken.
The IRA leaders complained that I had given nothing in return for their cessation of hostilities. They made demands that I could not accept but that I agreed to consider in case some peaceful way forward might be found.
The House may be interested to know what these demands were.
They called on the British Government to recognise publicly that it is the right of the whole of the people of Ireland acting as a unit to decide the future of Ireland.
They called on the British Government immediately to declare their intention to withdraw all British forces from Irish soil,

such withdrawal to be completed on or before 1st January, 1975. Pending such withdrawal British forces must be withdrawn immediately from sensitive areas.
They called for a general amnesty for all political prisoners in Irish and British gaols, for all internees and detainees and for all persons on the wanted list. In this regard they recorded their dissatisfaction that internment had not been ended in response to their initiative in declaring a suspension of offensive operations.
Before I could even discuss these matters with my Cabinet colleagues, the fragile truce was broken, as I have already set out.
I deeply regret that the Provisional Wing of the IRA has resorted to violence on the basis of one incident which could have been solved peacefully. I hope that it is not too late for even the Provisional IRA to think again and for the whole Northern Irish community to see the need for progress without violence.

Mr. Merlyn Rees: We know that the right hon. Gentleman has flown to and from Belfast today in order to report to the House, and that illustrates, in the midst of the very difficult job he has to do, his concern for the House of Commons. We on this side of the House accept the fact that he could not, therefore, afford us the general courtesy of giving us full notice of what he had to say.
Is the right hon. Gentleman aware that, whilst it is a statement of the obvious that this part of the policy, which we support and which led to the truce, is at an end, we know that at this dark moment sectarian violence is a real possibility, that we must still speak to that majority in the north of Ireland which wants peace, that if that fails there will be civil war, and that the more everyone in the north of Ireland realises this the more readily, perhaps, sanity will return?
Is the right hon. Gentleman further aware that, while we appreciate the need not to over-react to events in deciding the next steps in Northern Ireland, we want the security rôle in Northern Ireland made absolutely clear so that everyone knows what reaction will come in the face of the two armies, Protestant and Catholics, majority and minority—whichever is the best way of putting it—which confronts the British Army, particularly in


the face of the Protestant marching season which begins this week?
If not today, will the right hon. Gentleman tell us more of what happened at the Lenadoon Estate confrontation which was the excuse for what has happened?
With regard to the right hon. Gentleman's statement about the demands of the IRA, on the one point of unification it again shows a complete lack of reality about the political needs of the North. Has the right hon. Gentleman noted that Mr. Faulkner today made an appeal to the majority to keep the peace? Is it not a pity that he did not make it last week?

Mr. Whitelaw: I am grateful to the hon. Gentleman for the helpful way in which he has approached a very difficult situation. I would not accept that the policy of reconciliation of the communities in Northern Ireland either is at an end or can ever be at an end, because, frankly, there is no other way forward. These two communities have got to live together in peace in the future, and nothing can ever shake that fact. The sooner everyone realises it, particularly the extremists on both sides, the better. I regret that extremists on both sides make the task of anyone seeking reconciliation extremely difficult.
As for the security rôle of the British forces, their rôle as always, will be to keep the peace and to prevent sectarian violence. I should make it clear—although I can go into further detail later—that the problem concerning housing in Belfast has, on both sides in recent days, become more acute. There has been extreme intimidation in both communities. I therefore set up a Public Protection Agency to do everything I could to prevent intimidation and to encourage those families in difficult areas to remain against it. In the particular instance involved, discussions took place with my officials and all those concerned yesterday in an effort to find a means of solving what was a difficult problem in a fringe area. It was agreed at the end of that meeting that another meeting would be held tonight to resolve that problem. I regret that there were those who were not prepared to wait for the meeting tonight and immediately demanded that the Catholic families must be moved in at once. It was the view of the security forces that such action would

undoubtedly have led immediately to sectarian conflict. That being their view, they were bound, in their duty, to resist it, which they did. That is how the truce, I regret to say, was finally broken.
I think that answers the hon. Gentleman's main points.

Mr. Deedes: Is my right hon. Friend aware that, while we are all acutely conscious of the special difficulties confronting him, one grave consequence of this development will be increased risks for our security forces? Will my right hon. Friend bear in mind that public opinion will be uneasy lest those forces be placed by their orders at any disadvantage?

Mr. Whitelaw: Yes, certainly. I am extremely conscious of what my right hon. Friend says. I give him the assurance that they will not be placed at a disadvantage. I am bound to point out the desperately difficult rôle that they undoubtedly perform in keeping the peace. If extremists on all sides threaten them both ways, this is the great danger for them; but they will not be inhibited by their orders.

Mr. Pardoe: Is the right hon. Gentleman aware that in all quarters of the House this will be regarded as a tragic situation and that all British people will become increasingly bewildered by what is going on in Northern Ireland? Is he absolutely certain that in this situation British people in the near future can any longer find a solution in Northern Ireland? Will he not rule out the possibility of involving the United Nations in this affair?

Mr. Whitelaw: I note what the hon. Gentleman says. For my part, having been given the job, I will soldier through. Until I am relieved or until someone else is required I will soldier through, as is my duty to this country and to this House. If the British Government cannot solve this problem I do not believe anyone else will.

Mr. McMaster: Is my right hon. Friend aware that those who have suffered 400 murders in Northern Ireland in three years feel that it is totally wrong and must always be wrong to attempt to talk or negotiate with those who have got the blood of these people on their hands? Is he not also aware that what we require


of the security forces is not just that they should keep law and order, but justice? Justice must be enforced by the Government. Is my right hon. Friend aware that unless the Government are prepared to bring justice to Northern Ireland, those outraged members of the population who have seen 400 of their fellow countrymen murdered in a grizzly fashion, including the two Orr brothers last week, 7,000 mutilated, and much of our industry destroyed, will take the law into their own hands?

Mr. Whitelaw: In reply to my hon. Friend's first point, I certainly am not prepared to apologise to this House or to the country or to anyone else for any action which I took in the feeling that I might be able to save lives and prevent damage to property.

Mr. McMaster: We are talking of murder.

Mr. Whitelaw: If I have to talk to anyone at all in order honourably and properly to follow that course, I will certainly do so.
As for the other points raised by my hon. Friend, I do not intend to exacerbate the situation. All I would say to him is that I fully realise the immense suffering that has been caused to the majority of the population in Northern Ireland, but I might also say that I do not believe it is any use reacting with violence against violence. That way lies total disaster to everyone, and I hope my hon. Friend is not advocating that course. Reconciliation of the people into one community, living together in peace, is the only possible hope for the future.

Mr. Fitt: Would the right hon. Gentleman not agree that since he was so successful in negotiating a cease-fire his greatest opponents since that time have been the myriads of Unionist Party supporters, including the former Prime Minister, the Vanguard movement and the UDA movement, who have set out consciously and in concert to defeat him in his attempt to bring peace and reconciliation to Northern Ireland?
Would the right hon. Gentleman not further agree that at present there are at least 500 or 600 Catholic families who have been viciously intimidated out of their homes by these same extreme ele-

ments, and that this led to the confrontation yesterday afternoon? Would he accept that in his efforts to bring peace to Northern Ireland he should talk to all the interests concerned, including, as he has said in the House this afternoon, members of the Provisional IRA? He has already talked to members of the UDA, who in the final analysis may turn out to be a far more sinister and dangerous force than any other force in Northern Ireland.

Mr. Whitelaw: On the first point, no, I could not accept that these people have sought to frustrate any efforts that I had to make for peace. I think I have been long enough now in Northern Ireland to realise that, whatever efforts one makes towards peace, there are bound to be grave difficulties, doubts and fears, because fear is at the root of all the problems in the community. Whatever one does, one arouses these immense fears, and I understand all that. But I still maintain that it must be right to continue, as I was strongly advised, doggedly on in the course of reconciliation, no matter what are the disappointments.
As to intimidation, I must tell the hon. Gentleman that there has been considerable intimidation on all sides. I deeply regret this because it leads to a polarisation within the communities and to the separate communities living in separate areas. This is not for the good in the future. This intimidation is there. The root of it is, I regret to say, this very fear which lies at the root of all Northern Ireland's problems.

Mr. Sandys: Does my right hon. Friend agree that the tragic breakdown of the truce means not that his policy of reconciliation was in any way mistaken but that the fact that he has been so patient and tolerant will give him the moral strength and popular backing to adopt a policy of greater firmness if and when he considers it appropriate?

Mr. Whitelaw: I am very grateful to my right hon. Friend, particularly for his suggestion that I have been patient and tolerant in a difficult situation. That is the rôle of anyone who seeks to solve this very difficult problem. But, however patient one is, one cannot have any mercy on those who are determined in the final event to use violence and the


gun. If people are found using violence and the gun they have got to be properly dealt with, and that I will certainly do.

Mr. Orme: Would the right hon. Gentleman not agree that, however much it might appear desirable to people in the rest of the United Kingdom, it is absolutely impossible to disengage this part of the United Kingdom from the country of Ireland as such? Would he agree, therefore, that we have to find a solution to this problem? In that regard, apart from the breakdown of the truce this weekend, which I am sure everybody deplores, the other point has been the escalation this weekend of the UDA activities. Could the right hon. Gentleman say how he expects to deal with this situation? Is he having talks with the UDA? What is happening about the fresh barricades which are going up in Belfast? Is there any way of de-escalating this situation?

Mr. Whitelaw: I have previously had talks on three occasions with the UDA, and I have explained clearly to it exactly the various points of view. I very much hope that it, in company with everyone else, will see that barricades, violence and that sort of thing do not in the long run get anyone anywhere.

Mr. Biggs-Davison: Having disagreed with my right hon. Friend about his political initiatives, may I ask whether he is aware that this is no time for recrimination about the past but that it is a time for resolve to defend all sections against intimidation, to defeat the IRA by denying them their urban guerrilla bases and to end all no-go areas?

Mr. Whitelaw: I know that my hon. Friend has not agreed with some of the things that I am doing and, therefore, I am all the more grateful to him for saying that at this time there should be no recriminations.
As for the future, I am most anxious to ensure that if there are extremists on any side of the community, those extremists—or terrorists if that is what they become—are recognised as such by their respective communities and are not encouraged by them. That is a very important factor and a policy from which I shall not depart in any way. It is most important, in my judgment, that terrorists

from wherever they come should be isolated from the various communities.

Mr. Harold Wilson: Is the right hon. Gentleman aware that hon. Members in all parts of the House approach this matter with a real feeling of sympathy and understanding for him? Is he aware that many hon. Members would wish at this time to reinforce what has been said from both sides of the House, that though it is a great shock and a disappointment, nevertheless it does not prove that the policy is wrong? On the contrary, we are all hoping that the righthon. Gentleman will have the courage to go on pursuing the policy that he has been pursuing so far, because this is the right policy.
Is the right hon. Gentleman further aware that in so far as he has been criticised for meeting the Provisional IRA last week, some of us do not share that criticism? Indeed, my hon. Friend and I met some of the same people four months ago, and we believe that he was right to do that in the hope that something might have come out of it.
Fourthly, will the right hon. Gentleman recognise that on the reports that I have so far read—he is much closer to the situation than the rest of the House—no blame at all can be attached to the Army or security forces for this latest grievous development?

Mr. Whitelaw: I am most grateful to the right hon. Gentleman for his last remark, and I entirely agree. I am grateful also for his personal remarks towards me.
On the question of talking to the leaders of the Provisional IRA, in the very dangerous situation, as I saw it, towards the end of last week I came to the conclusion that it was my duty to seek to save lives if I could do it in any way at all, and that was, therefore, the course which I took. I am glad to be supported in it, because I shall certainly never feel like apologising for it.

Mr. Ronald Bell: While everyone must see the latest development as a tragic occurrence, may not the truth be that the so-called leaders of the Provisional IRA are not able to commit or control their supporters for more than a couple of weeks, and that, if this be so, the problem cannot be solved by any negotiations or agreement with that particular group of men?

Mr. Whitelaw: I would not wish to speculate on that. There was no question of an agreement or negotiation with that particular group of men. I thought it right personally to see them just to find out what the position was when I saw them face to face; and that is what I did.

Mr. Duffy: Could the right hon. Gentleman confirm that the 16 families who were at the heart of yesterday evening's confrontation had been properly granted tenancies? If that be so, will he say who persuaded the Army to deny them access? Was it the right hon. Gentleman himself, or was it representatives of the UDA?

Mr. Whitelaw: I understand that three of these families in particular—I shall check the exact figures—were allocated houses in that area provided that the security conditions were suitable. That is always a proviso which the housing executive has to make in these difficult areas, and that was the proviso which it did make. It was on the judgment of the security forces on the spot that it was not felt right that these families should enter at that time.
But I wish to make perfectly clear again that the whole question of the housing of these families was still a subject of discussion yesterday, and that a further meeting had been arranged for 7 o'clock tonight, when the matter could be further explored. One of my officials was actually there, and he is ready to go there again tonight to discuss further with all those concerned the particular problem involved.
It was only after that that the whole agreement which had been made was totally rejected and force was then used. The opportunity of this agreement, which had been made at lunchtime yesterday, seemed to me to offer a sensible way out of a very difficult problem.

Mr. David James: I congratulate my right hon. Friend on meeting members of the IRA. I concur with the Opposition; he was quite right. In future, though, will my right hon. Friend please refer not to Catholics and Protestants but to Anglo-Saxons and Gaels since this is really a tribal dispute, not a religious dispute; and will he bear in mind that we must reach a solution ultimately in concert with Dublin?

Mr. Whitelaw: I note what my hon. Friend says about nomenclature. I am sorry if I have been wrong, but since I have been in Northern Ireland I have heard the phrase "Protestant and Catholic" so often that I have become used to it and find it difficult to use any other.

Mr. Douglas: Will the right hon. Gentleman address his mind to the fact that the British people are becoming impatient with the running out of time in Northern Ireland, as the political initiative which he is undertaking was to buy time to reach a peaceful solution to the problem, and this seems more remote than ever? Second, has he a statement to make about his own political initiatives in bringing together representatives of the political parties in Northern Ireland for a conference? Third, is he satisfied that the marching season, which is to commence this week, will produce the correct security climate—this is very important—for the troops to operate in?

Mr. Whitelaw: On the hon. Gentleman's first point, yes, I think he is right; the British people are, naturally, impatient to find some solution to this problem. But it is a regrettable fact of history that they have been impatient for a great many years and it has defied a great many people for a very long time.
As regards political solutions and discussions with the parties, I had arranged to meet, as a first step, the Ulster Unionist Council this afternoon. As I have come to the House, I had to postpone that meeting to a later date, but I shall have it as soon as possible.
On the question of the marching season, I am most anxious that the traditional marches should go forward provided that the security conditions allow. I had very much hoped that these would be all right. I still hope that the security conditions will allow them to go forward, but, naturally, I am in close contact with the security forces about that.

Mr. Gardner: Will my right hon. Friend take it that he deserves the praise of the whole House and the whole country for the courage, patience and skill with which he has attempted to carry out the Government's policies in Northern Ireland? Will he make known to the people of Ulster, if it is not already


known to them, that we in this country are dismayed by the temporary—we hope, only temporary—frustration of that policy, and that we are tired and sickened at the conduct of extremists of all parties, being especially appalled by the fact that last night the leader of the Provisional IRA was able to make from Dublin, the capital of what should be, we hope, a neutral or, perhaps, a friendly country, a statement amounting to a declaration of war?

Mr. Whitelaw: My hon. and learned Friend was most kind to me in his opening remarks, but I regret to say that I deserve none of those things from the House, because I have not succeeded, and if one does not succeed one cannot deserve those kind comments.
On a second point, I should have thought that many people in Northern Ireland and many people throughout the United Kingdom would be thoroughly fed up with some of the manifestations of extremism which we have seen from all sides in Northern Ireland. I say simply this: there are many people in Northern Ireland who express passionately and devotedly their loyalty to the Queen and to the United Kingdom. I hope that at all times all of them will remember the responsibilities and duties which go with that loyalty and with that membership of the United Kingdom.
On my hon. and learned Friend's last point, I think that I shall say no more. I just note what he says.

Mr. Harold Wilson: I should not have risen again but for a new point which has been injected into the questioning in the last few moments by my hon. Friend the Member for East Stirlingshire (Mr. Douglas) and the right hon. Gentleman's reply on the question of whether the marches shall go on. Is the Secretary

of State aware that some of us feel that this is not a matter which can easily be decided or on which we should make recommendations to him from either side of the House at this point, but that probably what he said represents the wisest course. However, if he, being so much closer to the situation, and to the security authorities in particular, feels it necessary to vary the view which he has just pronounced to the House, will he take it that he will have the full backing, I am sure, of this side and probably other parts of the House, too?

Mr. Whitelaw: I am very grateful to the right hon. Gentleman and I am equally conscious that denying the right of traditional marches can sometimes cause more trouble than allowing them. One must be careful and balanced in taking decisions on the matter. That we must be.

FINANCE [MONEY] (No. 3)

Queen's recommendation having been signified, —

Resolved,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament of compensation to persons who cease to be President or full-time chairmen of value-added tax tribunals.—[Mr. Higgins.]

WAYS AND MEANS

SHARE OPTION SCHEMES (CAPITAL GAINS TAX)

Resolved,
That charges to capital gains tax may be imposed by excluding the application of section 22(4) of the Finance Act 1965 in relation to disposals of shares acquired under share option schemes.—[Mr. Higgins.]

Orders of the Day — FINANCE BILL

As amended (in the Committee and in the Standing Committee), considered.

Ordered,
That on consideration of the Finance Bill any Amendments relating to the Clauses and Schedules be considered in the following order of Clauses and Schedules, namely, Clauses 1 to 4; Schedule 1; Clause 5; Schedule 2; Clauses 6 to 10, Schedule 3; Clauses 11 and 12; Schedule 4; Clause 13; Schedule 5; Clauses 14 to 40; Schedule 6; Clauses 41 to 51; Schedule 7; Clauses 52 to 55; Schedule 8; Clauses 56 to 73; Schedules 9 to 11;Clauses 74 to 77; Schedule 12; Clauses 78 to 79; Schedule 13; Clauses 80 to 87; Schedule 14; Clauses 88 and 89; Schedule 15; Clauses 90 to 92; Schedules 16 and 17; Clauses 93 to 95; Schedule 18; Clauses 96 and 97; Schedule 19; Clauses 98 to 102; Schedule 20; Clause 103; Schedule 21; Clause 104; Schedule 22; Clauses 105 to 107; Schedule 23; Clauses 108 and 109; Schedule 24; Clauses 110 to 118; Schedules 25 and 26; Clause 119; Schedule 27; Clauses 120 to 131; Schedule 28.—[Mr. Higgins.]

4.2 p.m.

Mr. Hugh Jenkins: On a point of order, Mr. Speaker. I am aware that I cannot question your provisional selection of Amendments to the Finance Bill and that I am therefore not free to comment on the fact that you have not included in your provisional selection any of the Amendments which seek to give zero-rating to the theatre. As I understand that one of the reasons which affected your decision in the matter was that the subject has been discussed in Committee, will you bear in mind in reaching your final selection—because this, of course, is a provisional selection—that only a small number of hon. Members were present during the Committee stage when the matter was debated. Will you be good enough also to bear in mind that a number of hon. Members, including hon. Members who were not present in the Committee—for example, from the Liberal Party—have sought to put their names on the Notice Paper to Amendments? A large number of new points have been raised in correspondence inThe Times and elsewhere.

Mr. Speaker: As the hon. Member has pointed out, I have made a provisional selection. Wihout giving him any

undue cause for optimism, I will consider what he said before making a final selection.

Mr. Tam Dalyell: Further to the point of order, Mr. Speaker. Would it not be possible to consider whether the selection of Amendments could not be arrived at earlier than on the Monday morning? I criticise no one, least of all yourself, Mr. Speaker. Some of us would have liked the weekend to look more closely at the Amendments which were selected.
Another point should be mentioned here, and perhaps it comes more easily from the Opposition than the Government, and that is that Treasury Ministers and their officials must have an enormous amount of work to do to prepare for all the Amendments, most of which will not be selected. One wonders whether this is a sensible use of ministerial time. Perhaps if trade associations and others who make representations made their representations a little earlier they could save a great deal of hard work by a lot of people.

Mr. Speaker: The Chair also does not always get very long notice of what the following week s business will be. The hon. Member is on a point. In this case the Chair and its advisers did the best they could. It would be for the convenience of hon. Members on both sides and for both Front Benches if there could be longer notice.

Mr. Leslie Spriggs (St. Helens): On a point of order, Mr. Speaker. May I seek your guidance on new Clause 20, relating to the cost of travel to work? I see no sign of the new Clause being called.

Mr. Speaker: The provisional selection has been posted up. In order to save the time of the House, the Chair is approachable in these matters. If hon. Members have points to make to the Chair about a particular Amendment or new Clause I and my advisers will be very glad to try to answer them. If every point is raised on the Floor of the House, however, it means we shall sit up even later tonight.

Mr. Joel Barnett: Further to the point of order by my hon. Friend the Member for West Lothian (Mr. Dalyell), Mr. Speaker. This is an important point because it is terribly


difficult to have only about an hour or two before the debate starts to know which particular subject will be debated. I very much appreciate your problem, Mr. Speaker, of not being able to select Amendments or new Clauses before knowing when all the Amendments have been put down. It would be helpful, provided it was not on a Monday, to have a day's notice of the Amendments selected. Such an arrangement would be particularly helpful. If that were not possible, perhaps we could have notice earlier in the morning. I understand that very little can be done about relieving the Government of the job of preparing for all the Amendments, but, like my hon. Friend, I can find something better for the Government to do.

Mr. Speaker: I shall bear all the points in mind. Perhaps it might be better for important stages of Bills to begin on a Tuesday, rather than a Monday, but these are things to be discussed through the usual channels. They are not matters for the chair. I will bear in mind the point of the hon. Member for Heywood and Royton (Mr. Joel Barnett) about the decisions being announced earlier in the morning, if that is possible. It would not have made much difference in this case.

Mr. Dalyell: May I ask through you, Mr. Speaker, if the Chancellor would be prepared to consider the matter?

The Chancellor of the Exchequer (Mr. Anthony Barber): I have taken note of what has been said.

New Clause 51

REDUCTION OF GENERAL BETTING DUTY ON ON-COURSE BETS

'(1) In section l(2)(a) of the Betting and Gaming Duties Act, 1972 (general betting duty on on-course bets), for the words "5 per cent." there shall be substituted the words "4 per cent.".

(2) This section shall come into force on 31st July, 1972'.—[Mr. Patrick Jenkin.]

Brought up, and read the First time.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin): I beg to move, That the Clause be read a Second time.

Mr. Speaker: With this new Clause it will be convenient also to discuss new Clause 28,

Horserace Totalisator Board to be exempt from betting duty
'Notwithstanding the provisions of the Betting and Gaming Duties Act, 1972, the Horserace Totalisator Board shall not be liable for payment of any form of betting duty on the facilities provided by it',

new Clause 30,

General betting duty on on-course bets

'(1) Section 1(1) of the Finance Act, 1970, which specifies the general betting duty payable in respect of any bet made on or after 27th April, 1970, shall be read and have effect as if in paragraph (a) thereof, which relates to on-course bets, for the words "5 per cent." there shall be substituted the words "3 per cent.".

(2) This section shall have effect in respect of any on-course bet made on or after the coming into force of this Act'.

new Clause 54,

Amendment of s. 12(4) of Betting and Gaming Duties Act, 1972

'(1) From the date of coming into force of this Act section 12(4) of the Betting and Gaming Duties Act, 1972, shall have effect as if in place of the definition of "on-course" bet there were substituted the following: —
'on-course bet' means—

(a) a bet made in the coarse of a meeting, either by means of a totalisator situated on premises forming part of the track or with a bookmaker present at the meeting, where—

(i) the person making the bet (that is to say, the person originating the bet and not any agent or intermediary) is present at the meeting, or
(ii) the bet is made by a person carrying on a bookmaking business acting as principal (and not acting as agent for. or on behalf of, some other person);
(b) a bet on a horserace (not being a cash bet) made by means of sponsored pool betting and which is not an on-course bet as defined in paragraph (a) of this definition provided that such a bet shall not be treated as an on-course bet if at the time when the bet is made the difference between the rates of duty specified in subsection l(2)(a) and subsection l(2)(b) of this Act or any modification thereof for the time being in force) exceeds 2 per cent.".

(2) From the date of the coming into force of this Act section 12(4) of the Betting and Gaming Duties Act, 1972, shall be further amended by adding the following new definition: —
'cash bet' means a bet in respect of which the stake is paid at or prior to the time when the bet is made"'.

and new Clause 55,

Amendment of s. 1 of Betting and Gaming Duties Act, 1972
'In relation to any on-course bet made on or after 17th July, 1972 (section l(2)(a) of the Betting and Gaming Duties Act, 1972 (which relates to general betting duty), shall be read and have effect as if, in place of the words "5 per cent." there were substituted the words "4 per cent."'.

Mr. Jenkin: New Clause 5 deals with the general betting duty and its purpose is to widen the differential between the on-course and the off-course rate of duty. At present the off-course rate is 6 per cent. and the on-course rate is 5 per cent., giving a differential of one percentage point. If the Clause is carried the on-course rate will be reduced from 5 per cent. to 4 per cent. giving a differential of two percentage points. The cost of the new Clause would be about £2½ million in a full year.
Those right hon. and hon. Members who were members of Standing Committee E which considered the Bill will recollect that we had a very full debate on the problems which are at present facing the racing industry. The Government were pressed by hon. Members on both sides to recognise the difficulties, and I undertook, without any commitment, that the Government would study the case that had been made. This we have done. We have also had representations from bodies outside who have been good enough to provide us with a wealth of statistical and other information of which it is right for the Government to take notice.
The case that was made to us came under three heads. First it was argued that starting prices are based on bets placed on course and that the whole of the off-course betting market depends upon them. If the disparity in the total amount of bets placed is too wide, if the on-course market is too weak, the market can be open to manipulation with grave damage to the confidence of betters and to the yield of the duty. It was argued that the differential which was introduced in 1970 at a difference of one percentage point was not enough and that the market would be strengthened if the differential were widened.
The second and more general argument that was advanced was based upon the health of the racing industry as such. It was argued that what was needed was bigger attendances on the race course

which would in turn lead to better prizes and a higher quality of racing and that it therefore needed a virtuous circle starting with higher attendances.
It was argued, third, that racing will be facing new burdens under VAT which will be imposed on entrance fees and, to some extent, on the fees paid by owners to trainers.
The Government have considered all these arguments most carefully. We do not place much weight on the last argument. Value added tax is a tax on the end consumer, and the consumer, whether he be a racegoer or a racehorse owner, should be in no different position from anyone else. On the other hand, we accept that there is a need to strengthen, if possible, the on-course market and that it is desirable to help race attendances. It is for that reason that my right hon. Friend has tabled the Clause.
The cost, which as I have said is likely to be about £2½ million in a full year, will largely be brought about as a diversion from the off-course betting market. We do not expect that there will be a substantial influx of new money. It remains to be seen how far that will be accompanied by any significant increase in attendances, but I believe it will be hoped by all hon. Members that that will be the result.
As a by-product of the Clause, the sum paid out by the Tote is likely to be reduced by £150,000 per annum. That may be of help to the Tote in its difficulties.
Every Chancellor faces competing claims for tax relief. This year has been no exception. However, racing is part of our national life and we are satisfied that there is evidence that danger to the health of the industry could arise and, therefore, that the total yield of the duty could be at risk if we did nothing. That case was pressed by my hon. Friends and by the hon. Member for Birmingham, All Saints (Mr. Brian Walden), among others, from the Opposition. We have felt it right to accept the case, and the Clause is the result.

Mr. Dalyell: The Chief Secretary referred to the health of the racing industry. If we are to talk about competing claims, I hope that this is a taste of what is to come. If we are to talk about the health of the racing industry, after all that went


through in Committee, we also might talk about the health of some rather greater priorities, such as people. I hope having heard that remark, that other Amendments, such as that standing in the name of my hon. Friend the Member for Willesden, West (Mr. Pavitt), will have a favourable response from the Treasury. The health of people should take priority as a competing claim over the health of the racing industry.
I should like to be clear that the £2½ million is the cost to the Revenue?

Mr. Jenkin: Yes.

Mr. Dalyell: Then why could not it be equalled out? I understand the need to differentiate in favour of on-course betting, but why could not something be made up on off-course betting? There are many hon. Members who might think that if the Treasury has £2½million to give away there are better ways of doing so. I, for one, am less than happy about this.

Mr. W. R. Rees-Davies: It is not right to say that anything is being given away.
I pay tribute to the Treasury Ministers. None of them, from the Chancellor down, claims to be an expert racing enthsuiast, but all of them have shown a close interest in this subject which has been put to them on a number of occasions. I had the pleasure, with a number of my hon. Friends, to discuss this matter about a year ago in the House. The then Chief Secretary, who has moved to another task, pursued the matter further. Each of the three Treasury Ministers has heard representations both inside and outside the House, and has given careful consideration to a number of matters which have been raised.

4.15 p.m.

This is not an easy subject and is definitely a matter for the expert. Following Second Reading I tabled an Amendment, which was discussed in Committee, to secure six to one. I do not resile from the fact that, if one is to achieve the betterment of the racing industry, a wider differential will in due course be necessary than that which has been put forward. I regard today's provision as a good down payment on account this year, but let the Chancellor be under no illu-

sion that when VAT has to be paid by punters next year we shall expect to see a substantially wider differential. I am sorry that the Chancellor cannot accept an Amendment to secure half-and-half this year.

I also pay tribute to my hon. Friend the Member for Surrey, East (Mr. William Clark), who took on the unenviable and not always easy task of arguing this matter in the debate which took place in Committee, supported by others of my hon. Friends. I am happy to say that there was good all-party support for the proposition. We do not want to get involved in party politics on these issues.

I shall briefly give some new material to the House to support my case for a wider differential next year, if we are prepared to accept the small differential now which gives us 6 per cent. off-course and 4 per cent. on-course. First, the Treasury has done far better out of this tax than it ever dreamed of doing. When we told the Treasury of the likelihood of its getting figures approaching these, it did not believe it. Betting on-course in 1971–72 produced £5½million. That is both horses and dogs. Betting off-course produced £69,647,000.

Off-course betting is 93 per cent, and on-course betting is a mere 7 per cent. The total turnover in 1971–72 was £1,161 million of which only £112 million was on-course. The result is that certain leading chains of bookmakers—one of the largest, in particular—no longer have to send any of their money on-course. As a result there has been a gradual fall in horse racing attendances and, consequently, a fall in amenities. In 1953, there were 693 racing days with a total on-course attendance of just under 6 million and TV coverage of only 27 days. By 1971 there were 855 racing days, attendance had fallen to 4¼ million, and TV coverage had risen from 27 to 242 days.

In the meanwhile, the Government had done very well. The tax was introduced in 1966 and by 1968 the Government were already getting £44½ million off-course and only £5 million on-course. Although they were getting £44½ million, they were still getting 10 per cent. on-course and 90 per cent. off-course. By 1971 the revenue to the Treasury had risen to upwards of £70 million, whereas


on-course remained stagnant at only £5 million at 7 per cent.

If we get a differential on-course, we shall be able to get people to go racing. Television coverage has not had an entirely bad effect on on-course attendances. Racing through the lens has given people an opportunity to watch racing with great regularity and at last a number of new people would like to go to the course. For them to go on the course is very stupid in view of the present tax situation. The cost for an average day's racing is at least £2 to get into the members' enclosure and at least another £1 for food because of the very high catering rates, plus payment for drink and travelling costs. The total is £4 or £5.

If one goes on the course and bets as a reasonable man might and has two winners during the afternoon, one might get £4 back, with the tax of 3 per cent., as against 6 per cent. off-course. To put it in another way, one can get back most of what one has paid for a reasonable day's racing with the differential of 6 per cent. for off-course and 3 per cent. for on-course. If this is broadened and brought down to 6 to 1 the purpose of increasing attendances can be achieved.

We want to do this for two main reasons. The first reason can be stated simply. At present race courses have not the revenue with which to provide the amenities which are necessary. If the Levy Board could provide better prize money and had a better opportunity on-course, at least we could try to leave the revenue coming to on-course betting in the hands of those better able to promote it.

The other reason is as follows. It may be interesting to note that an astonishing position is now arising in regard to revenue for race courses. In Great Britain and Eire there is a total in stakes by way of purses of £4,224,263 in respect of racing. In France the amount is more than double, £9,848,484. The number of races in Great Britain is 3,306 and in France the number is 3,721. The average stake per race in Great Britain is £1,278 and in France is it £2,647. The average earnings per runner in this country are £555 and in France £1,278. Therefore, anyone in his right hand will run

his horses in France and not in this country if he gets the opportunity. Fortunately a large number of racehorse owners are clearly not in their right mind and are quite willing to give us the advantage of spending their money on racing in this country.

There are several major reasons why it is essential to continue with the widened differentials. First, there is in substance no money coming to on-course betting. There is only one professional punter, a Maharaja. Nowadays no man can make a living out of racing as used to be done. Whether that was right or wrong, morally, it used to be done and it created a healthy on-course market. Soon the big bookmakers will not need to utilise the on-course services. The Extel services are down by £250,000 this year. Apart from a very strong off-course market, people would go to meetings and spend their money for the benefit of racing.

Why should there not be an advantage for some of those who are supporting racing whereas those of us who sit at home and watch racing on television are giving no support whatever to racing? It is reasonable that there should be a wide differential to encourage people to see the sport and to enjoy it. The third reason is that without a substantial difference we cannot get the on-course amenity and the purse which will enable this country to compete with France.

Therefore, I hope that with the demand we have seen this year, the obvious knowledge which Customs and Excise have of gaming and the interest of the Treasury Bench in the sport and expert economists who I am sure will join in this debate, we can ensure a healthy outlook and continue to help the racing industry.

Mr. Arthur Davidson: I think the Chief Secretary was quite right to put forward this new Clause. He will know that my hon. Friends and I tabled in Committee a new Clause which was identical to this—perhaps not actually identical, but the elegant superiority of the Treasury phrasing has produced a new Clause which would have exactly the same effect.

Mr. Patrick Jenkin: We at least had to indicate when the new Clause would come into effect.

Mr. Davidson: In Committee I subsequently discovered that I had to indicate when our new Clause would come into operation, and I did so.
I welcome the concession, which it is right to make in the interests of racing, because it is essential that there should be a strong on-course market, not only for the benefit of racing as a whole but to prevent it from being open to any possible corruption and manipulation of the market. The present position is absurd, for comparatively trivial sums of money can alter the whole basis of the betting market and the person who always suffers in those circumstances is the punter, particularly the small punter. For that reason the purpose of the new Clause is to increase the differential, and this is welcomed.
I am little disappointed, however, that the Chief Secretary did not make reference to other new Clauses which myhon. Friends and I tabled, which would have enabled credit bets taken by the Tote off-course to be paid at the same rate as the on-course bets. This, I understand, would have increased the revenue to the Tote by about £22,000 a year. The hon. Gentleman told us that under this new Clause the revenue to the Tote will be increased by £150,000. That will be most welcome for the Tote in its present financial difficulties, which are considerable. They are so considerable that the Government have introduced a Bill to enable the Tote to get out of its difficulties. It would not be fair to refer in detail to that, but I merely say that in general the Opposition welcome those proposals.
It would have been helpful if the Chief Secretary had accepted the new Clauses to which I have referred, so that credit bets taken by the Tote for off-course betting would have been paid at the same rate of duty as on-course bets. That would have had the effect of increasing the Tote's revenue and in my view it would not have significantly changed the credit market or acted to the detriment of the Tote. It would have been a very useful extra measure. However, I do not wish to be churlish, and perhaps the hon. Gentleman may accept one of those new Clauses later in our proceedings.
This new Clause is a very useful step which will encourage more people to go racing instead of staying at home to watch

it on television. Most of my constituents do not go into the rings which were referred to by the hon. Member for Isle of Thanet (Mr. Rees-Davies). They seldom go into the £2 ring; they go into the much cheaper one. But then, I have different constituents from the hon. Gentleman's. That is my good fortune.
I do not wish to be churlish. We all appreciate that the Chief Secretary has kept his word. He said that he would look at our proposed new Clause. He has in fact accepted it, and I welcome his new Clause.

4.30 p.m.

Mr. William Clark: We had a comprehensive debate in Committee about on- and off-course betting. The House is grateful to my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) for giving us a resumé of that debate.
The one reason for reducing the on-course betting duty is to increase the attendance at race meetings. It will indirectly help the Tote. In Committee my hon. Friends and I tabled an Amendment to reduce the duty from 5 per cent. to 1 per cent., and then for Report we tabled our new Clause 30 to reduce it to 3 per cent. The Treasury has compromised by proposing to make it 4 per cent. Perhaps our tactics were wrong. Perhaps on Report we should have tried to reduce it to 1 per cent., when we might have obtained 2 per cent. or 3 per cent.
Be that as it may, I do not think the differential of one point, now two points, will have the material effect that my hon. Friend suggests. He says that the Tote will be helped to the extent of £150,000, which is very welcome in view of the Tote's position. We are all anxious to increase the attendances at racecourse meetings, and we now have the Treasury rowing with us. If those attendances do not increase sufficiently—and though I am not naturally a pessimist I do not think the one point drop will result in much increase in attendances—will my hon. Friend the Chief Secretary confirm that he has not closed his mind to a further reduction in the on-course betting duty next year, because it is essential to maintain the horseracing industry?

Mr. Simon Wingfield Digby: I should like to add a few brief


words to welcome the concession in the Clause. I must immediately declare an interest, because I am a breeder and, in a much smaller way, an owner. Nearly all my racing takes place in a television room not very far from here, so it is unnecessary to explain to me what colour television has brought to racing.
The hon. Member for West Lothian (Mr. Dalyell) was a little unkind to punters, saying that they should have no concession. There are many of them, in all walks of life, and they need some consideration. In some ways the reduction in duty may help them.
My first point concerns the starting price. Many people will agree that it is sometimes a little difficult to justify, and I think the concession to on-course betting will help.

Mr. Dalyell: I am not being unkind to punters. I was simply asking, if £2½ million was available, whether parents with young children facing problems over the price of shoes and so on were not a priority.

Mr. Digby: I see the puritan approach to these matters, but there are times when recreation is justified, and I do not think that lowering a tax on the punter is altogether a bad thing.
My second point concerns the health of racing. I am grateful for what my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) said about the comparison with French racing. Another relevant matter is the extent to which American horses are carrying all before them in this country. The thoroughbred is essentially a British product. Our exports of thoroughbreds have brought a great deal of money into the country in recent years, but those exports will tend to dry up if we allow the breed to deteriorate.
The French courses are certainly drawing many of the best horses. This is a time when the French thoroughbred is in temporary eclipse and when it is a very good plan to give a much-needed boost to British racing, where the rewards and attendances at courses are too small. For example, it is much more tempting for a Frenchman to go to Long champs, at a much lower cost, than it is for a British punter to go to many of our courses.
For those reasons, I am very glad that my hon. Friend the Chief Secretary has made this concession.

Mr. Joel Barnett: I was very interested in the speech of the hon. Member for Isle of Thanet (Mr. Rees-Davies),who speaks frequently on this subject, with great knowledge. He should perhaps have a word with the Foreign and Commonwealth Secretary, who spoke at the weekend about some people being rather greedy in their demands for wages and therefore increasing inflation. It seems that the Government have not done quite enough for the hon. Gentleman, although I appreciate that the £2½ million that the Chief Secretary talked about may well not be the actual loss of revenue.
Whether or not the differential, as amended by the Clause, is right or wrong is obviously arguable. The hon. Gentleman seeks a wider differential. Others would argue that perhaps the balance is about right. I do not know whether it is. We shall have to see.

Mr. Rees-Davies: The point is that if the revenue continues to go up off-course, it will be found that 6 per cent. is about the optimum chargeable. It will attract around £70 million. If the punter goes on to the course instead of staying off it, the money goes into the courses, the Levy Board does not have to provide the money, and the Government get that benefit. That is why we have the differential.

Mr. Barnett: I take the hon. Gentleman's point. On the general issue, I agree that it is very likely that there would be no loss of revenue. But the Government have estimated that the change will cost £2½ million, and therefore I understand the argument of my hon. Friend the Member for West Lothian (Mr. Dalyell), which was not made from a puritanical point of view. It is not puritanical to suggest that there are better ways of spending £2½ million. I, too, would rather it went to parents to buy children's shoes, but I do not believe that there will be a reduction in revenue of £2½ million.
The hon. Member for Isle of Thanet said that no man can now make a living out of betting. There are many Measures I should like to see on the Statute Book, and many Amendments I should like


to make to Finance Bills, but it has never been one of my greatest desires to see a Measure which made it possible for someone to make a living out of betting. If I thought that the Clause had that intention, or moved in that direction, I should not be supporting it now. When the hon. Gentleman told us how tragic it was that there was only one maharajah left on the courses, my heart bled for all the others who have been forced off. I am very sad about that, but I should not want to do anything to bring them back again. However, if they would like to return, I should not want to discourage them.
I accept the Clause for one reason above all others—the need to protect the small punters who do not go to the racecourse, the factory workers and the housewives who bet with their few bob and who are affected by the honesty of the on-course betting. If for no other reason, it is important that we should try to keep the balance right.
Therefore, I officially accept the new Clause. While I agree that we need to look at the balance in terms of the differential, I would not wish it to be thought that I accept that the present level of betting tax is right. However, we can leave that matter for another occasion.

Mr. John Cronin: I wish to put two points to the Chief Secretary. First, the differential is so small that it can be beneficial only for people betting in very large sums, bearing in mind the cost of attending race meetings and the other expenses involved. I wonder whether it will be effective in bringing about an increase in the attendances at racecourses. Will the Chief Secretary give an assurance that he will open his mind to increasing the differential further in another Finance Bill if he finds that the concession is not having the desired effect?
Secondly, it is obviously necessary in the interests of British bloodstock and the export of British horses that race meetings should continue and should flourish. But the most important thing is to increase the prize money for races, because some of the prizes given in this country are derisory compared with those given in France, and even more derisory com-

pared with those given in the United States.
Can the Chief Secretary say who will be the beneficiaries of the concession? Admittedly, it is possible that attendances will increase as a result of it, but what steps is he taking and what consultations has he had to ensure that the financial advantages derived from the concession lead to the betterment and improvement of racing?

Mr. Patrick Jenkin: The debate does not call for a long reply, but I have been most interested in the points that have been made.
The hon. Member for Loughborough (Mr. Cronin) and my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) have cast doubt on whether doubling the differential is likely to have any significant effect on attendances. I said when moving the new Clause that we would have to wait and see. It does not mean that if there is a shift of money from off-course to on-course betting it will be accompanied by a commensurate increase in the number of people who go racing. It is most unlikely that it will. But it may attract some people to bet on-course instead off-course, and we shall watch the figures very carefully.
A number of hon. Members have asked whether we rule out doing anything further next year. As the House would expect, I must reserve the position of my right hon. Friend the Chancellor of the Exchequer. I hope that none of us ever has a closed mind on anything. We shall keep the situation under review.
The hon. Member for Accrington (Mr. Arthur Davidson) asked about the proposal which is embodied in his new Clause No. 54. We would feel reluctant to go down that road because an important principle of taxation and not merely of betting taxation is involved, namely, that those in like case should be treated in the same way. We would find it difficult to treat certain sorts of off-course betting or betting with certain betting organisations differently from others simply on the ground that one wanted to encourage, for example, the Tote. I should have thought that, in terms of betting duty, it would need to compete on level terms with the bookmakers. It has been said that the book-making organisations would look with


favour on a differential of the sort which the hon. Gentleman has suggested, but I doubt whether that is so. We do not feel able to accept his suggestion.

4.45 p.m.

My hon. Friends the Members for Dorset, West (Mr. Wingfield Digby) and Isle of Thanet compared the situation in this country with that in France. There are a number of differences. I hope that I shall not be taken as saying anything provocative, let alone giving any indication of policy in this regard, when I say that bookmakers do not exist in France. There is, I understand, a Tote monopoly there. That plainly makes a big difference. One of the attractions for many people of going racing in this country is to see the colourful characters lining the rails and to place bets with them. This is a matter of difference in national taste and national habit.

The hon. Member for Loughborough rightly drew attention to the importance of bloodstock exports. However, I must add acaveat, that the trade statistics do not draw a distinction between horses which are exported temporarily for the purpose of racing or breeding which return to this country and those which represent a genuine export earnings in the ordinary sense. We must tread warily when considering how much weight we should attach to that argument.

Mr. Cronin: Could the Chief Secretary take steps to ensure that the statistics set out the exact position?

Mr. Jenkin: I shall consider whether that can be done, because it would be helpful, but the exporter may not know what is likely to happen in respect of a horse which is exported.

Mr. Wingfield Digby: Is it not clear from the figures published after the New-

The Treasury may by order make provision for securing that where a television set—


(a) is supplied on hire for a period beginning before 1st April 1973; and


(b) is treated by virtue of regulations made under section 7 of this Act as supplied for successive parts of that period;


and such other conditions are satisfied as may be specified in the order, the tax on the supply for such a part ending on or before 31st March 1975 shall be chargeable as if the consideration for the supply were reduced to such extent as may be specified in the order; and different provision may be so made for different parts so ending and for different circumstances'.—[Mr. Higgins.]

Brought up, and read the First time.

The Financial Secretary to the Treasury (Mr. Terence Higgins): I beg to

market December sales that an enormous number of horses go abroad, thus earning a great deal of money?

Mr. Jenkin: I would rather not say more without studying the figures. I shall look into the matter to see whether we can produce more satisfactory statistics.
The hon. Member for Heywood and Royton (Mr. Joel Barnett) appeared at one time to be wanting his oil cake and eating it. He agreed with the new Clause and with his hon. Friend the Member for West Lothian (Mr. Dalyell). I think that the general feeling in the House is that the modest increase in the differential which we are proposing is right in the circumstances. We shall wait to see what happens. I make no commitment, but this is a step in the right direction. I am glad that the new Clause has had a general welcome, and I recommend it.

Mr. Dalyell: Is it a question of a £2½ million erosion to the Revenue, or is it saved on the checks and balances?

Mr. Jenkin: Our best estimate is—and estimating is always very difficult in this matter—that this concession represents a net loss to the Revenue. It represents the lower rate of duty on that amount of money which will be switched from off-course to on-course betting. It is very difficult to estimate to what extent it will attract new money into betting, and we make very little allowance for that. It is better to make a conservative estimate rather than an estimate which may be too optimistic.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 52

TELEVISION SETS SUPPLIED ON HIRE AT COMMENCEMENT OF TAX

move, That the Clause be read a Second time.

The House will appreciate that the proposals in the Clause stem from the debates that we had in various stages in Committee. It is concerned with what the hon. Member for Birmingham, All Saints (Mr. Brian Walden) described as the famous television rentals Amendment. It so happens that the form of the drafting requires it to be put forward as a new Clause rather than in the form in which it was moved in Committee. But its intention is clear.

I hope not to detain the Committee too long, but I think it is appropriate to spell out precisely what it is that we have in mind. There was considerable discussion in Committee on the philosophy of double taxation and so forth, and there were some differences of opinion in various parts of the Committee about it, though I pointed out that the expression was a nebulous one and might refer to a situation where both VAT and revenue duties were charged but that this might well be to the advantage of those concerned, depending on what my right hon. Friend proposed next year.

I also said that it might not be possible in all circumstances to avoid double taxation, especially when one was virtually reforming the whole of our indirect tax structure, which is what we are doing by abolishing purchase tax and SET and introducing VAT. None the less, my right hon. Friend has put forward proposals designed to overcome the general problem of purchase tax paid stocks in terms of sale or return arrangements or the transitional period. But we appreciate that that may not be a perfect solution. It is generally accepted that no perfect solution is available.

That is a separate question. The matter with which this Clause is concerned is the situation that arises because VAT will be charged on television rentals and some of the sets involved may already have paid purchase tax. Whatever one's views on double taxation, I think that we are right to be concerned about the disruption of trade. Therefore, we were impressed by the arguments in Committee about the disruption of trade which might arise in connection with television rentals.

I understand that there is a manuscript Amendment, Mr. Deputy Speaker, and that you are considering selecting it. I do not know whether you wish it to be

discussed with the new Clause or whether you intend the House to come to it at a later stage—

Mr. Deputy Speaker (Miss Harvie Anderson): I think it will be convenient to discuss the manuscript Amendment, but I was proposing to say that after putting the Question, "That the Clause be read a Second time". It is in order to discuss it.

Mr. Higgins: I am not clear whether the House is familiar with the content of it. As we are on Report and not in Committee, I should be in some difficulty in replying to the manuscript Amendment later, and I do not know whether I should be allowed to speak a second time. However, if you wish us to proceed as you suggest, Mr. Deputy Speaker. I am happy to do so.
I turn, therefore, to the new Clause—

Mr. Alfred Morris: The hon. Gentleman will recall that, with the hon. Member for Hampstead (Mr. Geoffrey Finsberg) and representatives of the Retail Consortium, I saw him at the Treasury about the problem of double taxation as it affects retail trade as a whole. I appreciate that the hon. Gentleman is dealing with a specific matter here. But in the course of his speech will he give us any further information that may be available about the representations that we made to him?

Mr. Higgins: I should be out of order if I did that. This is a special case about the position of rental agreements as against the normal position of tax paid stocks.
For the benefit of the House, perhaps I might set out what we propose. I think that it is the case that the time limit that we have in mind is clear from the wording of the Clause itself. But the Clause will give us power to make an order which will propose relief, and it is right to outline to the House what our intention is about that order, although it will be considered by the House in due course. Our intention, if the House accepts the Clause, is to make an order which will have the effect of reducing the rental charge on which VAT will be calculated. Our present intention is to reduce the charge on television rental contracts entered into before 1st April, 1973, by two-thirds in 1973–74 and by one-third in 1974–75. The


relief will terminate on 31st March, 1975, and VAT will then be charged in the normal way on the full rental of each set. The relief will not apply to contracts entered into on or after 1st April, 1973.
It is difficult to make accurate estimates of the cost of the relief because of the increasing speed with which colour television sets are replacing monochrome sets. But it is likely that the cost of the Clause on the basis that I have outlined would be of the order of £20 million in 1973–74 and between £5 million and £10 million in 1974–75.
I explained in Committee that consultations about the detailed arguments for transitional relief had not been completed. Since then, we have been carrying out further consultations not only with the larger companies involved but also with representatives of the smaller companies because a number of rental agreements are made by comparatively small retailers. As a result, we now bring forward these proposals.
If I understood you correctly, Mr. Deputy Speaker, you do not wish me to deal with the manuscript Amendment now. But if I have the leave of the House at a later stage I shall seek to deal with the various points which may be made upon it.
It is worth while stressing that we were naturally concerned about the problem of the disruption of trade. It was for that reason that we thought it right to table the new Clause. But I repeat what I said in Committee. The rental industry generally has already benefited from the reductions in purchase tax. It will benefit further from the switch to VAT, and I do not think that anyone argues that television sets as such should not be within the scope of VAT. It is also the case that the industry will gain from the abolition of SET. As I explained in Committee, although the figure that it gains may only be one per cent. of turnover, that might be the equivalent of 10 per cent. of profits.
I add a word about the basis on which we have sought to look at the degree of relief. It was explained in Committee that there were essentially four elements in rental payments which it was right to distinguish. I stress again that all these

figures are necessarily very approximate and that they may vary considerably from one trader to another. The first element is the recovery of the capital cost of the set. That is probably of the order of one-third of the total charge. The second element is the repair, maintenance and servicing costs, which might be of the order of 20 or 25 per cent. of the total. The third element is the recovery of overhead costs and interest on capital. The fourth element is profit.
I think that it will be accepted in principle that VAT should be charged on the total rental charge and that, as the only element of the total charge which already has been subject to taxation is the capital cost of the set, there is no reason why transitional relief should go wider than this element. It would create an indefensible situation in relation to the taxation of other trades if the proportion of the television rental charge representing the recovery of overhead costs, including interest on capital, profit and so on, were not subject to VAT. This is an argument which the Committee accepted, and I hope the House will feel it right to accept it this afternoon.

5.0 p.m.

In essence, we are proposing relief of the kind which I outlined in my opening remarks. We have concluded, looking at the subject in as much depth as we could and after consultation with many of the trade interests involved, that a relief which is about three times the annual average recovery of the capital cost of a television set, but compressed into a two-year period, and with a revenue cost of the order I have outlined goes as far as it is reasonable to go to meet the arguments put forward for transitional relief. We think this is a fair and reasonable solution and hope the House will support it.

We think it is right to split the relief on a two-thirds and one-third basis over a two-year period for two reasons. First, it is in the interests of the efficient management of the economy that relief should be over as short a period as possible and, secondly, it meets the point raised by many traders that the maximum possible relief is desirable in 1973–74 as it will be then that there will be most incentive for other firms to operate in such a way that trade is disrupted. I am sorry to weary the House at such


great length, but I thought it right to put forward the thinking behind the new Clause.

Mr. Deputy Speaker: Before I call the hon. Member for Ashton-under-Lyne (Mr. Sheldon), I should like to make it clear that I think it would be the wish of the House to discuss the new Clauses and manuscript Amendment as we have already begun to do, but that if a Division is required it will be in order to call for a Division after the new Clause has been read a Second time.

Mr. Robert Sheldon: Thank you for that ruling, Mr. Deputy Speaker. I have tabled a manuscript Amendment to new Clause 52, in line 1, after "set" insert
or other goods which have been charged to purchase tax at a rate in excess of 10 cent.".
At the outset I should explain why this is a manuscript Amendment. Obviously, it is not for the convenience of the House that this be the normal way in which Amendments are moved, preventing, as it does, any interested person having full access to it before it is selected and before the House meets. The reason is that new Clause 52 was put down as a starred new Clause so the Opposition did not have an opportunity until today to examine it and putdown an Amendment. I mention this so that the background is clearly understood.
The new Clause is welcome so far as it goes. We must bear in mind that the new Clause has arisen as a result of an Amendment in Committee moved by my hon. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) which sought to enunciate the general principle that where purchase tax had been paid on an article which was subject to a rental agreement stretching over the period of the introduction of value added tax double taxation should not be imposed. The Financial Secretary, resisting that Amendment, made a number of points to which I shall return. In the new Clause the Government have accepted the major part of the Amendment moved by my hon. Friend.
It must be understood that this part, whereby no relief was intended on television sets, is probably one of the least defensible parts of a Bill which contains a number of indefensible elements. Why is it that, having accepted the principle

that where purchase tax has been paid on a television set the subject of a rental agreement, that same principle is not accepted for other articles of an almost identical character? This is the most important of the elements whereby agreements are made to rent certain items which contain an element of purchase tax. The hon. Gentleman has reluctantly—certainly he seemed very reluctant in Committee to accept either the principle or the particular example—has now accepted it for television sets. Why?
I should like to explain the Opposition's attitude to the new Clause. The Financial Secretary said that he would spell out precisely what he had in mind: It is a great pity it was not so spelt out in the new Clause, which cannot be accepted as a very happy form of legislation. It gives wide powers to the Government to introduce orders intended to reduce the element of double taxation. The specification of those orders is not to be the subject of any Finance Bill; it is to be by means of orders and regulations, and we know what that means.
Upstairs we had what amounted to a very good and rigorous scrutiny of the Bill which did credit to both sides. I hope that the way in which the Government were tested will be repeated on future occasions. However, when we come to this part of the Bill we know that that kind of scrutiny, that kind of examination and testing, will not be possible because we are giving the Financial Secretary power to introduce an order into the House, which will probably occur late at night, with no possibility of amendment or of thorough discussion of the kind which we had upstairs. The kind of scrutiny which we have a right to expect and on this occasion obtained will not be possible on an important element of the Bill, in terms not so much of total money, but of numbers of people affected, because about 10 million people would be paying substantial amounts as a result of the double taxation inherent in the Bill before the new Clause was proposed.
We have all been bombarded with letters from interests as well as constituents justifiably complaining about this lack of provision for excluding double taxation. The size of the problem is readily understood when it is known that of the 17 million television sets installed


by 1st April next year 60 per cent, approximately will be rented. That gives the measure of the seriousness and extent of the problem.
The Government have had two years to think about this matter. We have frequently been told that those two years have been spent in full and thorough discussion and negotiation with the various interested parties concerned, which obviously include the television rental people. Yet we found the Bill made no concession in that area. Then, because of arguments brought out in Committee, the concession was won. I am sure that the Financial Secretary will not mind my saying that the method to be adopted is rather difficult to understand. It is less of a concession than we thought we would get, and we might therefore want to return to this issue. On the spur of the moment I am not prepared to accept this as the kind of concession that was debated in Committee.
The hon. Gentleman said that the cost of this concession will be about £25 million to £30 million. The principle of the Amendment moved in Committee was that no goods subject to purchase tax and a rental agreement before 1st April, 1973, the rental for which spread over into the period of VAT, should be subject to double taxation, and the hon. Gentleman gave the cost of that as £30 million to £40 million.

Mr. Higgins: The hon. Gentleman has not quoted correctly what I said in Committee. The figure which he has quoted was for the Amendment which appeared on the Notice Paper. I sought to show then—and I have repeated it today—that there are a number of elements in the hiring charge which have previously not been taxed and which it is right should come within the scope of VAT.

Mr. Sheldon: I thought that I had made that point. I thought I said that that was the cost of the Amendment, the principle of which was that tax should not be charged on goods on hire. The cost of the Amendment was given as £30 million to £40 million. The Financial Secretary said in Committee:
Acceptance of the Amendment"—

this relates to goods subject to purchase tax and a rental agreement going over into the period of VAT—
—which I do not recommend—would involve the substantial cost of approximately £30 million or £40 million in the first year, declining as the assets were depreciated over future years."—[Official Report,Standing Committee E; 14th June, 1972, c. 984.]

Mr. Higgins: That was the cost of the Amendment, but the hon. Gentleman will recall that the Amendment set out in column 978 does not refer specifically to television sets. Secondly, it does not refer merely to the capital cost element which has borne purchase tax. The figure is therefore correspondingly greater.

Mr. Sheldon: I understand that. My point is that having taken the higher figure, and having subtracted from it the lower figure given by the Financial Secretary, one is left with the net balance being the cost of that element of the Amendment which is not covered by the new Clause.
It is necessary to discover the cost of extending this principle to all the other goods involved. It is obviously small, because the major element arises from television rentals. It is therefore necessary to examine why, if the hon. Gentleman has seen fit to accept this principle for television sets, he is not prepared to apply it to car rentals, office equipment and other matters.

5.15 p.m.

There are a number of other areas concerned but, because of the late arrival of the new Clause, full representations on it have not been possible. If the hirer happens to be a business he will be allowed the VAT as an input, but if it is a private hiring with a rental agreement that is binding there will be some loss either by the hiring firm concerned or, depending on the contract entered into, by the person doing the hiring. If the hon. Gentleman says that this kind of double taxation is wrong and he has therefore introduced the Clause to remedy it, he should extend that remedy over the whole field, and not confine it to one aspect.

Another example which springs to mind is that of office equipment purchased by an exempt trader or some other body. In that situation, the person concerned will find himself subject to double


taxation of precisely the kind that one finds with television rentals. I do not see why the hon. Gentleman should have introduced a narrow Clause when he could have dealt with the matter comprehensively.

I disagree with the breadth of the new Clause and the fact that it does not spell out that which can be examined in the way that we examined other Clauses in Committee. It says that where purchase tax has been paid on an article, namely, a television set, VAT will be reduced. How is it to be reduced? We are not told. The method is to be specified in an order to be introduced later. If the Financial Secretary is not prepared to spell out in detail how VAT will be reduced, he should apply the principle to things such as car rentals and other goods in respect of which there are rental agreements.

I know that the problem is that of discovering the component parts and levying the tax accordingly. The tax on the purchase price of a television set does not represent the entire amount that will need to be relieved from VAT. The system proposed by the hon. Gentleman is a very rough and ready way of working it out, because there will be wide variations in the proportions of the capital costs of rental companies buying the sets, and a much wider variation in servicing costs between firms in London and those elsewhere. As a proportion of the total rental, servicing costs in London will obviously be much higher than those in my constituency. If the hon. Gentleman is prepared to accept this rough and ready approach for television sets, why not adopt a similar approach for other articles?

The whole point is that this well-prepared Finance Bill needs a certain amount of time for negotiation. During the two years which he had at his disposal the hon. Gentleman did not take advantage of the opportunities offered for negotiation, with the result that companies and individuals will suffer when the Bill becomes law. I hope that I shall be proved wrong, and that the hon. Gentleman will find that he is committed to accepting the Amendment because he has so readily accepted the principle of no double taxation. The hon. Gentleman's acceptance

of the Amendment would give us a great deal of satisfaction.

Perhaps I may refer to the Financial Secretary's final comment on this point. He said, talking about the cost of £30 million to £40 million in the first year;
As the Committee will appreciate, that sum is sufficiently substantial to involve a possible change in the rate"—
this almost sublime rate of 10 per cent. which has been chosen for VAT—
which the Government are anxious to maintain at the level envisaged by my right hon. Friend the Chancellor of the Exchequer."—[Official Report,Standing Committee E, 14th June, 1972; c. 984.]

The hon. Gentleman has now accepted the cost of £30 million, but I notice that the rate has not been changed. So those arguments in Committee about the need to defend that rate at all costs suddenly seem to have melted away. When I saw new Clause 52 I looked for another new Clause that would amend the rate, but I failed to find it. So the strength of those arguments used so assiduously in Committee prove not to have the massive foundations which were then so frequently and monotonously asserted.

I ask the Financial Secretary to consider most carefully the arguments in favour of these other firms in precisely similar circumstances. It would be grossly unfair if because there are large numbers of people concerned he rightly accepted the principle in respect of television sets, but failed to apply in respect of a much smaller sum of money the identical principle which would ensure equity all round.

Mr. A. P. Costain: I thank my hon. Friend the Financial Secretary for the concession. I have had a number of letters from constituents expressing real concern, and a number of letters from old-age pensioners who depend so much on their television sets but feared that the addition of VAT to their rentals would be crippling. Those fears may have been somewhat exaggerated, but when one hears my hon. Friend speak of £20 million being involved one gets some idea of what is being conceded.
I should like to ask the Financial Secretary one or two straight questions. Will he explain how he gives away two-thirds and one-third in two successive years? Will he come to some arrangement with the rental companies by which


this concession having been made, they will explain to their hirers that it has been assumed that by the end of 1975 the purchase tax on the capital element has been repaid? Will it be made certain in so doing that the rental companies will reduce rents to this degree so that we avoid what has happened so often before, which is that when SET has been taken off—it will be VAT now—the consumer has seldom had the advantage but that when new taxation is put on he gets the disadvantage. Further, will my hon. Friend come to some arrangement with television rental companies that where there has been a combined sale of, say, a tape recorder and a television set the agreement makes quite clear how the rental will be split between the two.

Mr. Dalyell: As one who in Committee went on at some length about the needs of the industry, I feel that there are two separate problems here. First, there is the problem of the consumer, and the representations we have had from retailers big and small, and, secondly, there is the problem of the industry.
We have all had letters from British Relay, constituents of mine, sent to us by Mr. Sleith and Mr. Browne, and also from the Radio and Television Retailers Association of Scotland, saying that the cost to them should be about £40 million. As I understand it, the give-away in the Clause is £25 million, so there is a difference of about £15 million between what the retail interests asked for and what they are being given. I do not say that it is wrong that that should be so: I am just trying to establish what the erosion is to the Revenue under the Treasury Proposals. Is it £25 million?
In the Standing Committee, along with the hon. Member for Surrey, East (Mr. William Clark), I put the argument based on representations that we had from the television manufacturing industry. Here, I must say that at first sight that is really what has determined the Treasury, and if it is the representations of the industry rather than those of the retailers it behoves those who argue that the industry has a priority over even that of the retail trade to say "Thank you" to the Treasury.
Having said that, I should like the Financial Secretary to give further details

of the discussions that took place with the manufacturers. He himself said that the disruption of the industry was the major cause. If that was the major reason for the Treasury tabling this new Clause, can we be told whether the manufacturers themselves are happy with what has been arrived at?

Mr. Higgins: I am never quite clear what will or will not make any particular group of people happy, but as to the point made by the hon. Gentleman a moment ago, and which I then hesitated to deal with, I said that on the basis I have outlined—that is, two-thirds in one year, and declining—the cost will be of the order of £20 million in 1973–74 and of the order of £5 million to £10 million in 1974–75. Those were the figures I gave earlier. I appreciate that it is sometimes difficult to pick them up very quickly, but those are the figures.

Mr. Dalyell: If those are the figures, I guess that they are about £10 million or £15 million short of what the retailers asked for. That may or may not be right compared with other priorities, but it should be established as fact that the Treasury has gone perhaps two-thirds of the way to meet the retailers, but has not gone the whole way. I see the hon. Member for Folkestone and Hythe (Mr. Costain) shaking his head.

Mr. Costain: The point I tried to make in my short contribution was that this related to the capital element and the purchase tax involved in the rental, and so on.

Mr. Dalyell: That may or may not be so. I return to the problems of the industry itself and ask the Treasury whether in those discussions, which seem to have weighed more heavily than any others that it had, the industry was satisfied, because it seems on the crucial question of the third that something has been achieved. I therefore ask whether the industry after its discussions with the Treasury is reasonably happy from a production point of view with what has been done.

5.30 p.m.

Mr. William Clark: Everyone welcomes the Treasury's concession on television rentals, because what was worrying members on both sides of the Standing Committee was the disruption that could


have occurred in the industry resulting from uncertainty. There are at present 10 million television sets on rental, and the uncertainty would have affected future orders.
I do not accept the strictures made by the hon. Member for Ashton-under-Lyne (Mr Sheldon), because a 10 per cent. flat rate is the lowest in Europe and this consequently means that renting a television set will be so much cheaper than it was before. The present purchase tax of 25 per cent. on a television set has to be paid by the rental company. If one does one's arithmetic, one finds that for a set the capital cost of which is £154—in view of the introduction of colour television that is not an out-of-the-way price—if it is subjected to purchase tax at present rates, the annual rental under the rental agreement will be £51·37, which is roughly £1 per week. As to post-purchase tax, with VATin its place, for a similar set which cost £154 the rental over a five-year period will be £41·31. Tribute should be paid to my right hon. Friend for the introduction of VAT because, for the television rental industry rentals will be much cheaper under VAT than under purchase tax. I know that the hon. Member for Erith and Crayford (Mr. Well-beloved) wholly agrees with me about this.

Mr. Joel Barnett: How has the hon. Gentleman made his calculation that it will be very much cheaper under VAT bearing in mind that there was no purchase tax on the profit, which, as has been made clear, is very high, and on the servicing element which is equally quite high and which will now bear VAT?

Mr. Clark: I am in the same profession as the hon. Member for Heywood and Royton (Mr. Joel Barnett). Without the figures in front of me, he would not expect me to quote them. But I will tell him how my £51 and £41 is worked out. The hon. Member should also remember that, although VAT will be imposed on the service charge, and I accept that, a 25 per cent. rate of purchase tax is the equivalent of, I think, an 18⅔ per cent. VAT. I hope that my hon. Friend will correct me if I am wrong in that. Consequently, with a 10 per cent. rate of VAT, there is a

saving. So we welcome the concessions given by my hon. Friend.
One of the difficulties we had in Standing Committee, apart from the disruption of the industry because of uncertainty, was the feeling that because VAT sets would be cheaper to rent than purchase tax sets there would be uncertainty in the industry because television rental companies would hold off ordering, with a consequent rundown in the manufacture of sets.
But this does not overcome the problem of double taxation. The hon. Member for Ashton-under-Lyne is entirely right about this. If one has double taxation, what is the difference whether it is on a television set, a typewriter or a piece of office machinery? I take this point entirely. However, the hon. Member should remember that 99·9 per cent. of television sets in Britain are purchased or hired by the general public and not by registered traders. I assure the House that I have no interest to declare in this matter. But most of the other equipment, office machinery, computers, typewriters and so on, is hired under rental—even motor cars, which are in a rather different position from that of television sets; I shall return to that point—

Mr. Frank Tomney: The articles to which the hon. Member refers are correctly also charged against profits.

Mr. Clark: For example, office machinery being hired out is normally hired to firms which are registered traders. As registered traders, if my hon. Friend charged a VAT, this would be an input tax which the trader could charge as a credit to his output tax. There is, consequently, not the same hardship concerning office machinery. But there is the question of double taxation regarding television sets.
My hon. Friend has accepted this point and has come back with the new Clause saying, as I understand it, that of the first year's rental on sets hired before 1st April, 1973, two-thirds of the rental will be exempted from VAT, and the following year one-third of the rental will be exempted.
With 10 million television sets in the-country, all under varying terms of hire,


some of which may have one year to run and others four years, and so on, I am assured that the average period for hiring out a television set from rental companies is about seven years; a set lasts about seven years through the hiring mechanism. This takes no account of servicing and maintenance. Obviously, having accepted the principle of VAT, the House must accept the principle that VAT will be charged on maintenance on any piece of equipment, be it a television set, a typewriter or anything else. Consequently if a television set has a life of seven years, I suppose that one could take the average and say that most television sets have a life of 3½ years or more, and this means that a set upon which purchase tax has been paid, shall we say, just before 1st April, 1973, has seven years life in front of it on which purchase tax has already been paid.
In the last two years or so the cost of television sets has risen enormously. That had nothing to do with inflation. It was because so many people have been swapping from monochrome to colour television, which is much more expensive. The Amendment which we tried to convince the Treasury to accept did not specify any period as to when VAT should be charged on a television set because, as hon. Members on both sides of the House will accept, administratively it would be an impossible task for the Customs and Excise to police all sets in the country for the period of their life.
Consequently, as the hon. Member for Ashton-under-Lyne said, it has to be a sort of rough and ready rule. It will harm some; it may please others. I should have thought that with a two-thirds' exemption for the first year and one-third for the second year, a two-year remission of VAT is a little niggardly. It could have been a much longer period. As I said in Standing Committee, where hon. Members on both sides supported my argument, I should have preferred possibly three or four years as the time over which we should have this remission. My hon. Friend has given a two year remission, up to 1975. My only criticism of his concession is that I think he could have gone a little further.

Mr. Higgins: I must choose my words carefully, because this is rather a com-

plicated area but it was generally agreed in Standing Committee, and my hon. Friend altered the figures he quoted at an early stage of the proceedings and accepted that the capital element of the charge was likely to be about one-third. What we are proposing, therefore, is that we shall take it very approximately as being the one-third figure, but where these may have relief of two-thirds of the charge in the first year and one-third in the second, it is, so to speak, concertinaed into that two-year period. We think that this would be the right way of doing it because it gives more relief in the early period, when we are told that there will be the greatest danger of disruption. But the total amount is two-thirds' relief in the first year and one-third in the second year, but spread over two years.

Mr. Clark: I accept that. If my hon. Friend would like me to put words into his mouth, I should have taken it as one-third in the first year, one-third in the second year and one-third the following year, as the length of time for remission of VAT. One can never work it out accurately that someone who has paid purchase tax must get that exact amount as relief from VAT. Nevertheless, we welcome the concession.
I should like to ask my hon. Friend about two further points. From a reading of the new Clause, I presume that if a television set is supplied on hire for a period beginning before 1st April, 1973, this covers every television set that was out on hire, irrespective of for how long, before 31st March, 1973.
Secondly, we have the two years up to 31st March, 1975. If in the two years from 1st April, 1973, there is a change of hirer, can my hon. Friend assure the House that the concession given here will still be given to that particular television rental?

Mr. J. Bruce-Gardyne: The hon. Member for Ashton-under-Lyne (Mr. Sheldon) never disappoints us. I sometimes think that if he were presented with a crock of gold at the end of the rainbow he would say that it was an absolute scandal, that it was platinum, that it had arrived at an extremely inconvenient moment, that he would like to know precisely what all the small print


meant on the document committing the deed of gift, and, furthermore, if there were no small print there ought to be.
As the hon. Gentleman knows very well, although the Amendment which we discussed in Committee was in drafting terms a wide one, in practice the entire argument which was advanced in its favour by the hon. Member for Birmingham, All Saints (Mr. Brian Walden) and the discussion in Committee were concentrated on the issue of television rental agreements. We all understood clearly the reason for this; namely, that this was by far the widest category of consumer items held by private individuals who were not taxable persons from the point of view of VAT but who would stand to suffer double taxation unless a Clause such as the one which my hon. Friend has produced were put forward.
I realise that it always goes against the grain for Oppositions to say "Thank you", and perhaps it was too much to expect that the hon. Member for Ashton-under-Lyne could actually muster his forces to the extent of muttering those unseemly words. We on this side of the House should in all fairness recognise the effort that my right hon. and hon. Friends have made to smooth the rough places in this Bill. I think we have every reason to thank my hon. Friend the Financial Secretary for the concession which he has made and for the spirit in which it has been made. It seems to me that, notwithstanding even the muted reservations which my hon. Friend the Member for Surrey, East (Mr. William Clark) expressed, the essence of the case has been met, that what did seem to be grounds for genuine unfairness have been resolved, and I personally would like to express a very hearty word of thanks to my hon. Friend the Financial Secretary.

Mr. Higgins: The hon. Member for Ashton-under-Lyne (Mr. Sheldon) began by explaining—I say "explaining" rather than "apologising"—why he felt it necessary to move the manuscript Amendment. I think the House will appreciate the reasons which motivated him in doing this. Perhaps I may also in turn explain why this Government new Clause is starred and why other Government Amendments are starred. It might seem that the Government have been dis-

courteous to the House but I assure hon. Members that that is not the case.
We naturally gave careful consideration to what was said in the Committee stage. As I explained at the beginning, we have been anxious to carry out widespread consultations with the whole of the trade—this is the point which was made by the hon. Member for West Lothian (Mr. Dalyell)—not only with the large renters of television sets but also with the association which is responsible for the smaller retailers who are in some respects in a different position, and we needed to consider also the position of the manufacturers. I will return to that point in a few moments. That being so, we were anxious to get the Clause on the Notice Paper as quickly as possible.

5.45 p.m.

However, it is right to point out that the reason why this set of Clauses is starred is rather unusual. Strictly speaking, Mr. Deputy Speaker, this is a matter for you rather than for me, but, as I understand it, it arises from the fact that the House sat for a long time on Thursday night and that, so far as the House of Commons was concerned, Friday did not exist. As the House will no doubt remember—as a matter of fact, I was still here at mid-day on Friday—we did not conclude Thursday's proceedings until some time Friday afternoon. Because Friday did not exist, these Clauses, which would normally have appeared on the Order Paper on Friday and would have been starred then but would not have been starred today, did not appear on Friday's Order Paper and so they appeared starred today. In fact, I am not sure whether there was an Order Paper on Friday.

I understand that the notice of Amendments containing this one and most of those which are starred on today's Order Paper was available in the Vote Office from 10 a.m. on Friday, 7th July. I thought it right to explain that to the House because the Government would not like the House to feel that we had been discourteous.

Equally we understand the pressures under which the Opposition are working and the reason why a manuscript Amendment has been put down, which,


if I may say so, virtually repeats the position which was debated in Committee upstairs. Of course, a new situation has now arisen. The Government have thought it right to make a change about television rentals, and the position is that the Opposition have thought it right to put in their request for the broader concession. We understand that. [Interruption.]

The hon. Member for Heywood and Royton (Mr. Joel Barnett) from a sedentary position says that we have accepted the point of principle. He may recall that in Committee upstairs I was rather careful in putting forward our views on the question of principle with regard to double taxation. I pointed out, as I did this afternoon, that when one is reforming the whole of the indirect taxation system it may not always be possible to avoid double taxation altogether. Indeed, in some cases it may not even be desirable. But what we were anxious to do was to ensure that the transition from purchase tax and SET to VAT should proceed on an orderly basis. We were convinced that so far as television rentals are concerned there was a case for taking the measure which is now embodied in this new Clause. I will say a word or two more in a moment about the effect on manufacturers and so on, because a number of my hon. Friends have spoken on this point.

I shall deal first with the point made by the hon. Member for Ashton-under-Lyne when he argued that we should extend the scope of the concession. As my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said, it is always the task of an Opposition, no matter how generous the Government of the day may be, to say that not enough has been done. We quite understand that.

Mr. Joel Barnett: There is nothing generous here.

Mr. Higgins: It is £20 million to £25 million in the first year and £5 million to £10 million in the second. It depends what one means by "generous". That brings out the point I am making, that what the Opposition think generous may not necessarily be what the Government would regard as reasonable.

Mr. Sheldon: Before claiming credit for generosity, perhaps the hon. Gentle-

man will explain to the 10 million people concerned why they should ever have to pay twice the amount of tax which they would otherwise have to pay?

Mr. Higgins: I do not understand the hon. Gentleman's figures. It is a question of what is reasonable, and I put it on the basis of reasonableness. I do not wish to overstate my case. [Hon. Members: "Hear, hear."] Whatever may be said, it remains true that, although the measure of welcome may have varied in different parts of the House, no hon. Member has actually opposed the introduction of the new Clause.
The manuscript Amendment is designed to ensure that the relief goes wider. Both the hon. Member for Ashton-under-Lyne and his hon. Friend the Member for West Lothian raised the question of the figures. The figure which I gave in Committee, of about £40 million a year tapering, related to the Amendment then before the Committee. The manuscript Amendment now before us goes wider than the new Clause in two respects. First, it covers the whole of the rental charge and not just that part which has borne purchase tax; that is, the capital cost. Second, it covers more than television rentals.
On the second point, some hon. Members opposite sought to estimate what the cost of widening the concession would be to cover the unspecified list of items which they had in mind. I have to tell the House that it is not possible to put a precise figure on the cost which would be involved. However, I think it right none the less to discuss the manuscript Amendment and the points made by hon. Members in support of it.
One can reasonably say that television rental is a special case. It was clear from the speeches made in Committee that a number of hon. Members recognise that. We estimate that, at the time when the value added tax is introduced, there will be about 10 million television sets out on hire which have borne purchase tax. These will include some sets out on hire to the infirm and the elderly, and there would be a degree of hardship for them if relief were not given. This was one of the thoughts motivating us.
The same transitional arguments, however, do not apply with the same force in other cases. In the first place, most


of those items will bear, or will have borne, purchase tax at a significantly lower rate than that applying to television sets, in spite of the reductions in purchase tax on television sets which we have made.
Second, the average life of most of the other items to which the concession might apply is, generally speaking, a great deal shorter than is the life of television sets. For example, the rate of taxon evening dress suits let out on hire is only 11¼ per cent., and these items probably do not last as long as television sets. Some hon. Members opposite say that they are not, on the whole, items used by the most impoverished members of the community—[Interruption.]—though whether those who hire them are more impoverished than those who buy is an interesting question. The House will recall the interchange between my right hon. Friend and my hon. Friend the Member for Macclesfield (Mr.Winterton) about his second-hand suit which he would hand on to his son. However, I shall not digress into that.
Generally speaking, the rate on these items is lower, the life of the asset is less, and we believe that the number of them out on long-term hire is not significant.

Mr. John Gorst: Can my hon. Friend give any figures or estimates regarding privately hired motor cars? Second, could he say something about telephone systems for communication between flats and the front door for the opening of front doors, which at the moment are invariably on long-term hire arrangements? Would those and similar systems be subject to VAT or would they be exempted under Group 7 of Schedule 4?

Mr. Higgins: My hon. Friend tempts me to expand on other fairly complex parts of the Bill. The new Clause relates purely to television sets. The Amendment proposed by the Opposition would widen it a great deal. I do not believe that the disruption of trade likely to result, except in the case of television sets, will be significant.
It is worth emphasising that capital goods and office machinery will, generally speaking, not have borne purchase tax. Some items, for example, linen, carpets and so on, may have borne purchase tax,

and to the extent that they are hired out on long-term contracts commencing before 1st April, 1973—I understand that some of them are—they would benefit from the proposals put forward by the Opposition. But it is important to stress that most of those hiring these items are likely to be taxable traders. They could, therefore, take credit for the VAT invoiced to them, and transitional relief would not be needed. I think that the hon. Member for Ashton-under-Lyne recognised that point.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) asked whether we would ensure that the hirer explained that this relief was being given and, therefore, rents should be reduced. It is generally true that the level of taxation under VAT will be less than it will be during the transition period. If that were not so, there would not be the problem which we are discussing on the new Clause.
We have already made two substantial reductions in purchase tax. I think that there is some indication that the second of these was not passed on to an enormous extent by some firms. Obviously, this is a consideration which we should bear in mind.
It is essential that the transition be smooth, and we think it right, therefore, to adopt our proposal in regard to television rentals. My hon. Friend the Member for Surrey, East (Mr. William Clark) pointed out that what we have in mind—this is subject to what the House may approve in the order—is relief for two-thirds and then for one-third. We consider that that would create a smoother change-over than would otherwise be possible. We had very much in mind also that if we had not given relief in respect of television rentals the effect of the change-over might have been significant not only on renters but on producers of television sets. We were, naturally, very anxious that that should not be the case and that the transition should proceed in such a way that the actual manufacture of television sets and, therefore, the employment of those who were engaged in producing television sets should not be disrupted.

6.0 p.m.

My hon. Friend the Member for Surrey, East asked me two specific questions—

Mr. Dalyell: Are the producers generally content?

Mr. Higgins: I sought to indicate earlier that I am never sure when any particular group is content but I also sought to indicate that the proposals we have made, depending upon one's viewpoint, can be regarded as generous or, at any rate, reasonable. What cannot be disputed is that the new Clause will go a long way towards ensuring that the change-over from purchase tax and SET to VAT will go more smoothly.
My hon. Friend the Member for Surrey, East asked me two specific points which were related. He asked whether the provision would be applied on all sets and on a change of hirer. This is an important point which I wish to clarify, and I refer the House to the wording of the Clause. The proposed relief will apply only to television sets supplied under a contract of hire entered into before 1st April, 1973. It may be that some old sets which have borne purchase tax will be the subject of a new hiring agreement after 1st April, 1973. I hope I have made that clear. A monochrome set may be given up in exchange for a new colour set, and the old set may be rented out to a new hirer. But these new hirings are only a marginal part of the business and are usually made at competitive rates below the cost of comparable new sets. Therefore, their inclusion in the transitional scheme of relief which is limited to two years would produce complications both for the trade and for Customs, and some traders have expressed the view that they would find it easier to operate a distinction between a pre-VAT dated contract and a post-VAT dated contract than between a pre-VAT dated set and a post-VAT dated set.
It will considerably assist Customs in verifying the tax due if it can do this by reference to the contract rather than to the individual set and the date on which it was rented. But, bearing in mind the overall interest that we have, which is that the transition should be smooth, what we have proposed here will go a very long way to meet the case which has been made to us. We have given it the most careful consideration possible. I think it will generally commend itself to the House, and I hope, therefore, that the House will be prepared to accept it.
As for the manuscript Amendments tabled by the Opposition, I cannot recommend that they should be accepted, and I hope that the House will therefore feel it right to reject them.

Mr. Sheldon: If I may, by leave of the House, I should like to speak again. The hon. Member for South Angus (Mr. Bruce-Gardyne) referred to the new Clause as "a crock of gold".

Mr. Bruce-Gardyne: No.

Mr. Sheldon: Let me put it another way. He said that if the Government were to come to the House with a crock of gold, I would find something to complain about. It is not often, whether in Standing Committee or elsewhere in Finance Bill debates, that the hon. Member for South Angus can come to the ready defence of the Government and it may be that his action on this occasion was purely to improve his record. If that is so, his timing is singularly bad. It is hardly a crock of gold when 10 million people—and it should not be forgotten that that means perhaps 20 million voters—receiveback part of their money which the Government otherwise wished to take from them. I do not see that the Clause is as generous as the hon. Member makes out and, therefore, the Government are not to be particularly congratulated on bringing it forward. It is only right and proper.
If anything, the Government should be taken to task for not accepting the whole principle of which the Clause is only a part. It would be extremely easy for the Government to agree to the Opposition Amendment because the amount of money involved is very small indeed. It is so small that the Financial Secretary was unable to put a figure to it. We know it is small because we have had the figures relating to a much wider Amendment which was discussed in Standing Committee.
One of the difficulties of the new Clause is that it is drawn loosely. One of the advantages of the Opposition Amendment is that it can be fitted in easily. In the Amendment we say that in the new arrangement and in the new regulations which the Government will bring before the House they can take account of the other cases with which we are concerned. I know that normally it is difficult for a Government to accept new Clauses and


Amendments to new Clauses. The art of drafting is held to be very difficult. I am not sure exactly how true that is, but that is what we are told when we want to amend Bills. In this instance the draftsman's art is not required. We have tagged on to the drafting which the Government have used and we say that whatever they do in respect of one case shall apply to the other. The principle is one of double taxation of goods where purchase tax has been paid and where VAT is to be charged initially. The situation is met for television sets, and we say that it should be dealt with for the other articles which fall within the same provision.
This is one of those occasions when the Government can have nothing to say about drafting and about the principle. The Financial Secretary did not even take up the question of the principle because he knew perfectly well that he was conceding it in the biggest area and yet not conceding it in respect of other provisions. Therefore, when the time comes I shall

ask my right hon. and hon. Friends to divide in support of the Amendment.

Question put and agreed to.

Clause read a Second time.

Mr. Speaker: The hon. Member for Ashton-under-Lyne (Mr. Sheldon) may now formally move his three manuscript Amendments.

Mr. Sheldon: I beg to move, as a manuscript Amendment to the proposed Clause, in line 1, after "set" insert
or other goods which have been charged to purchase tax at a rate in excess of 10 per cent.
The two other manuscript Amendments are in line 2, leave out "is" and insert "are", and in line 3, leave out "is" and insert "are".

Question put. That the Amendment be made: —

The House divided: Ayes 200, Noes 221.

Division No. 280.]
AYES
[6.7 p.m.


Abse, Leo
Deakins, Eric
Jay, Rt. Hn. Douglas


Albu, Austen
de Freitas, Rt. Hn. Sir Geoffrey
Jenkins, Hugh (Putney)


Allaun, Frank (Salford, E.)
Dell, Rt. Hn. Edmund
Jenkins, Rt. Hn. Roy (Stechford)


Allen, Scholefield
Dempsey, James
John, Brynmor


Archer, Peter (Rowley Regis)
Doig, Peter
Johnson, James (K'ston-on-Hull, W.)


Ashton, Joe
Dormand, J. D.
Johnson, Walter (Derby, S.)


Atkinson, Norman
Douglas, Dick (Stirlingshire, E.)
Johnston, Russell (Inverness)


Bagier, Gordon A. T.
Driberg, Tom
Jones, Barry (Flint, E.)


Barnes, Michael
Duffy, A. E. P.
Jones, Dan (Burnley)


Barnett, Guy (Greenwich)
Dunnett, Jack
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)


Barnett, Joel (Heywood and Royton)

Jones, Gwynoro (Carmarthen)


Baxter, William
Eadie, Alex
Kaufman, Gerald



Edwards, Roberts (Bilston)
Kelley, Richard


Benn, Rt. Hn. Anthony Wedgwood
Ellis, Tom
Lambie, David


Bennett, James (Glasgow, Bridgeton)
Ewing, Harry
Lamborn, Harry


Blenkinsop, Arthur
Faulds, Andrew
Latham, Arthur


Booth, Albert
Fletcher, Raymond (Ilkeston)
Lawson, George


Bottomley, Rt. Hn. Arthur
Fletcher, Ted (Darlington)
Leadbitter, Ted


Boyden, James (Bishop Auckland)
Foley, Maurice
Lee, Rt. Hn. Frederick


Bradley, Tom
Foot, Michael
Leonard, Dick


Broughton, Sir Alfred
Ford, Ben
Lestor, Miss Joan


Brown, Bob (N'c'tle-upon-Tyne,W.)
Fraser, John (Norwood)
Lewis, Ron (Carlisle)


Brown, Hugh D. (G'gow, Provan)
Freeson, Reginald
Lipton, Marcus


Brown, Ronald (Shoreditch &amp; F'bury)
Galpern, Sir Myer
Lomas, Kenneth


Buchan, Norman
Garrett, W. E.
Lyon, Alexander W. (York)


Callaghan, Rt. Hn. James
Gilbert, Dr. John
Mabon, Dr. J. Dickson


Campbell, I. (Dunbartonshire, W.)
Golding, John
McBride, Neil


Cant, R. B.
Grant, George (Morpeth)
McCartney, Hugh


Carter, Ray (Birmingh'm, Northfield)
Grant, John D. (Islington, E.)
McElhone, Frank


Castle, Rt. Hn. Barbara
Griffiths, Will (Exchange)
McGuire, Michael


Clark, David (Colne Valley)
Grimond, Rt. Hn. J.
Mackenzie, Gregor


Cocks, Michael (Bristol, S.)
Hamling, William
Mackie, John


Concannon, J. D.
Hannan, William (G'gow, Maryhill)
Maclennan, Robert


Conlan, Bernard
Harper, Joseph
McMillan, Tom (Glasgow, C.)



Harrison, Walter (Wakefield)
Marsden, F.


Corbet, Mrs. Freda
Hart, Rt. Hn. Judith
Marshall, Dr. Edmund


Cox, Thomas (Wandsworth, C.)
Hattersley, Roy
Mason, Rt. Hn. Roy


Cronin, John
Healey, Rt. Hn. Denis
Meacher, Michael


Cunningham, G. (Islington, S.W.)
Horam, John
Mellish, Rt. Hn. Robert


Dalyell, Tam
Houghton, Rt. Hn. Douglas
Mendelson, John


Davidson, Arthur
Hughes, Rt. Hn. Cledwyn (Anglesey)
Mikardo, Ian


Davies, Denzil (Llanelly)
Hughes, Robert (Aberdeen, N.)
Millan, Bruce


Davies, Ifor (Gower)
Hunter, Adam
Miller, Dr. M. S.


Davis, Clinton (Hackney, C.)
Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Morgan, Elystan (Cardiganshire)


Davis. Terry (Bromsgrove)
Janner, Greville
Morris, Alfred (Wythenshawe)




Morris, Charles R. (Openshaw)
Robertson, John (Paisley)
Tinn, James


Morris, Rt. Hn. John (Aberavon)
Rodgers, William (Stockton-on-Tees)
Tomney, Frank


Moyle, Roland
Roper, John
Torney, Tom


Mulley, Rt. Hn. Frederick
Rose, Paul B.
Tuck, Raphael


O'Halloran, Michael
Ross, Rt. Hn. William (Kilmarnock)
Urwin, T. W.


O'Malley, Brian
Rowlands, Ted
Varley, Eric G.


Orme, Stanley
Sheldon, Robert (Ashton-under-Lyne)
Wainwright, Edwin


Oswald, Thomas
Short, Rt. Hn. Peter (Stepney)
Wallace, George


Paget, R. T.
Short,Rt.Hn.Edward(N'c'tle-u-Tyne)
Watkins, David


Pannell, Rt. Hn. Charles
Silkin, Rt. Hn. John (Deptford)
Wells, William (Walsall, N.)


Pardoe, John
Silkin, Hn. S. C. (Dulwich)
White, James (Glasgow, Pollok)


Parker, John (Dagenham)
Silverman, Julius
Whitehead, Phillip


Pavitt, Laurie
Skinner, Dennis
Whitlock, William


Pentland, Norman
Small, William
Willey, Rt. Hn. Frederick


Perry, Ernest G.
Spearing, Nigel
Williams, Alan (Swansea, W.)


Prentice, Rt. Hn. Reg.
Spriggs, Leslie
Williams, Mrs. Shirley (Hitchin)


Prescott, John
Stallard, A. W.
Williams, W. T. (Warrington)


Price, J. T. (Westhoughton)
Steel, David
Wilson, Alexander (Hamilton)


Probert, Arthur
Stewart, Donald (Western Isles)
Wilson, William (Coventry, S.)


Rankin, John
Stoddart, David (Swindon)
Woof, Robert


Rees, Merlyn (Leeds, S.)
Strang, Gavin



Rhodes, Geoffrey
Summerskill, Hn. Dr. Shirley
TELLERS FOR THE AYES:


Roberts, Albert (Normanton)
Thomas, Jeffrey (Abertillery)
Mr William Hamilton and


Roberts, Rt.Hn.Goronwy (Caernarvon)
Thomson. Rt. Hn. G. (Dundee. E.)
Mr. James Wellbeloved.




NOES


Adley, Robert
Eyre, Reginald
Lane, David


Alison, Michael (Barkston Ash)
Farr, John
Langford-Holt, Sir John


Atkins, Humphrey
Fell, Anthony
Le Marchant, Spencer


Awdry, Daniel
Fenner, Mrs. Peggy
Lewis, Kenneth (Rutland)


Baker, Kenneth (St. Marylebone)
Fidler, Michael
Longden, Gilbert


Barber, Rt. Hn. Anthony
Finsberg. Geoffrey (Hampstead)
Luce, R. N.


Batsford, Brian
Fisher, Nigel (Surbiton)
McAdden, Sir Stephen


Beamish, Col. Sir Tufton
Fortescue, Tim
MacArthur, Ian


Bell, Ronald
Foster, Sir John
McCrindle, R. A.


Bennett, Sir Frederic (Torquay)
Fox, Marcus
McLaren, Martin


Benyon, W.
Fraser.Rt.Hn.Hugh(St'fford &amp; Stone)
McMaster, Stanley


Berry, Hn. Anthony
Fry, Peter
McNair-Wilson, Michael


Biggs-Davison, John
Gardner, Edward
McNair-Wilson, Patrick (New Forest)


Blaker, Peter
Gibson-Watt, David
Madel, David


Boardman, Tom (Leicester, S.W.)





Gilmour, Ian (Norfolk, C.)
Marten, Neil



Gilmour, Sir John (Fife, E.)
Mather, Carol


Body, Richard
Glyn, Dr. Alan
Maude, Angus


Boscawen, Robert
Godber, Rt. Hn. J. B.
Maxwell-Hyslop, R. J.


Bossom, Sir Clive
Goodhew, Victor
Meyer, Sir Anthony


Bowden, Andrew
Gorst, John
Mitchell, David (Basingstoke)


Braine, Bernard
Gower, Raymond
Moate, Roger


Bray, Ronald
Grant, Anthony (Harrow, C.)
Money, Ernle


Brewis, John
Gray, Hamish
Monro, Hector


Brinton, Sir Tatton
Green, Alan
Montgomery, Fergus


Brown, Sir Edward (Bath)
Grieve, Percy
Morgan, Geraint (Denbigh)


Bruce-Gardyne, J
Griffiths, Eldon (Bury St. Edmunds)
Morgan-Giles, Rear-Adm.


Bryan, Paul
Grylis, Michael
Morrison, Charles


Buck, Antony
Gummer, J. Selwyn
Mudd, David


Bullus, Sir Eric
Gurden, Harold
Murton, Oscar


Butler, Adam (Bosworth)
Hall, Miss Joan (Keighley)
Noble, Rt. Hn. Michael


Campbell, Rt. Hn. G. (Moray&amp;Nairn)
Hall, John (Wycombe)
Normanton, Tom


Carr, Rt. Hn. Robert
Hall-Davis, A. G. F.
Nott, John


Chapman, Sydney
Hamilton Michael (Salisbury)
Onslow, Cranley


Chataway, Rt. Hn. Christopher
Hannam, John (Exeter)
Oppenheim, Mrs. Sally


Churchill, W. S.
Harrison, Col, Sir Harwood (Eye)
Osborn, John


Clark, William (Surrey, E.)
Havers, Michael
Page, John (Harrow, W.)


Clegg, Walter
Hawkins, Paul
Parkinson, Cecil


Cooke, Robert
Hicks, Robert
Peel, John


Cooper, A. E.
Higgins, Terence L.
Percival, Ian


Cordle, John
Hill, James (Southampton, Test)
Peyton, Rt. Hn. John


Corfield, Rt. Hn. Frederick
Holland, Philip
Pink, R. Bonner


Cormack, Patrick
Hordern, Peter
Powell, Rt. Hn. J. Enoch


Costain, A. P.
Hornby, Richard
Price, David (Eastleigh)


Critchley, Julian
Hornsby-Smith.Rt.Hn.Dame Patricia
Prior, Rt. Hn. J. M. L.


Crouch, David
Howell, Ralph (Norfolk, N.)
Proudfoot, Wilfred


Crowder, F. P.
Hunt, John
Quennell, Miss J. M.


d'Avigdor-Goldsmid,Maj.-Gen.James
Hutchison, Michael Clark
Raison, Timothy


Dean, Paul
James, David
Ramsden, Rt. Hn. James


Deedes. Rt. Hn. W. F.
Jenkin, Patrick (Woodford)
Redmond, Robert


Digby, Simon Wingfield
Jessel, Toby
Reed, Laurance (Bolton, E.)


Dixon, Piers
Johnson Smith, G. (E. Grinslead)
Rees, Peter (Dover)


Dodds-Parker, Douglas
Kellett-Bowman, Mrs. Elaine
Rees-Davies, W. R.


Dykes, Hugh
King, Evelyn (Dorset, S.)
Renton, Rt. Hn. Sir David


Eden, Sir John
King, Tom (Bridgwater)
Ridley, Hn. Nicholas


Elliot, Capt. Walter (Carshalton)
Kinsey, J. R.
Ridsdale, Julian


Elliott, R. W. (N'c'tle-upon-Tyne.N.)
Knox, David
Roberts, Michael (Cardiff, N.)


Emery, Peter
Lamond, James








Roberts, Wyn (Conway)
Stewart-Smith, Geoffrey (Belper)
Vaughan, Dr. Gerard


Rossi, Hugh (Hornsey)
Stoddart-Scott, Col. Sir M.
Walder, David (Clitheroe)


Rost, Peter
Stokes, John
Walker, Rt. Hn. Peter (Worcester)


Russell, Sir Ronald
Stuttaford, Dr. Tom
Ward, Dame Irene


St. John-Stevas, Norman
Tapsell, Peter
Warren, Kenneth


Sandys, Rt. Hn. D.
Taylor, Sir Charles (Eastbourne)
Weatherill, Bernard


Scott-Hopkins, James
Taylor,Edward M.(G'gow,Cathcart)
Wells, John (Maidstone)


Sharples, Richard
Taylor, Frank (Moss Side)
Wiggin, Jerry


Shaw, Michael (Sc'b'gh &amp; Whitby)
Taylor, Robert (Croydon, N.W.)
Wilkinson, John


Shelton, William (Clapham)
Tebbit, Norman
Winterton, Nicholas (Macclesfield)


Sinclair, Sir George
Temple, John M.
Wolrige-Gordon, Patrick


Skeet, T. H. H.
Thatcher, Rt. Hn. Mrs. Margaret
Woodhouse, Hn. Christopher


Smith, Dudley (W'wick &amp; L'mington)
Thomas, Rt. Hn. Peter (Hendon, S.)
Woodnutt, Mark


Soref, Harold
Tilney, John
Worsley, Marcus


Speed, Keith
Trafford, Dr. Anthony



Spence, John
Trew, Peter
TELLERS FOR THE NOES:


Sproat, Iain
Tugendhat, Christopher
Mr. Michael Jopling and


Stainton, Keith
Turton, Rt. Hn. Sir Robin
Mr. John Stradling Thomas


Stanbrook, Ivor

Question accordingly negatived.

Clause added to the Bill.

New Clause 53

SHARE OPTION SCHEMES (CAPITAL GAINS TAX)

'Section 22(4) of the Finance Act 1965 (assets deemed acquired and disposed of at market value) shall not apply in calculating, for the purposes of any disposal made after 5th April 1972, the consideration given for the acquisition of shares in pursuance of a share option scheme as denned in Schedule 12 to this Act'.—[Mr. Patrick Jenkin.]

Brought up, and read the First time.

Mr. Patrick Jenkin: I beg to move, That the Clause be read a Second time.
The Clause closes a possible loophole in the share option provisions of the Bill. The House will be aware that there is a general provision of the capital gains tax laws to be found in Section 22(4) of the Finance Act, 1965, under which an asset acquired otherwise than under a bargain at arm's length is treated as being acquired at market value and not at the price paid. The purpose of the provision is to ensure that the full capital gains tax is charged on the dispenser. It also fixes the acquisition cost of the acquirer.
A recent decision of the appellate commissioners has shown that, where the asset consists of shares issued by a company, Section 22 operates to fix the market value as the cost in the hands of the acquirer. That does not affect the issuing company because the issue of shares is not a disposal for capital gains tax purposes.
Unless the House takes steps to prevent it, this rule would operate to confer a wholly unjustified benefit where shares are issued pursuant to an approved share option scheme and the option holder

acquires the shares at the option price, but under Section 22(4) of the 1965 Act he would be treated as getting them at market value. It is our intention that he should pay capital gains tax on the increase in value between the option price and market value. If he is deemed to acquire them at market value, there would be no such increase and, therefore, no liability. I assure the House that this is not the intention of the Government and we are taking the opportunity of the Clause to close the loophole.

Mr. Peter Rees: Why is not the option holder in such a situation to be regarded as acquiring the shares at arm's length? It may be implicit in the appeal commissioner's decision, but none of us is privileged to know the basis of the decision. I should like to be reassured that the Amendment is not unnecessary.

Mr. Jenkin: Because of the relationship between a person who is acquiring under an approved share option scheme and the company for whom he is working, the transaction might be regarded as being one at arm's length, but it may equally not be so regarded. The relationship of the acquirer under the approved share option scheme may be such as to entitle a court to hold that it was an arm's length transaction and, therefore, subsection (4) would apply.
It is the advice that Ministers have received that there would be a chance of the Section taking effect in that way; and, because this would be wholly to defeat the intention of the new legislation embodied in the Bill, we have thought it right not to take that chance and to deal with the matter in the way


I have described. The Clause will close any loophole that there is. I hope that the House will feel it right to accept it.

Dr. John Gilbert: I thank the Chief Secretary for his explanation of the purpose of the Clause. We welcome the motives underlying it but it will in no way diminish our fundamental opposition to the schemes in general to which the Clause relates. I agree with the Chief Secretary that this looks like being a necessary Clause to block up a potential loophole. Had matters been construed in the way he considered possible, clearly a coach and horses could have been driven through the safeguards in Schedule 12, minimal as they are.
We in no way relax our opposition to the principle of share option schemes. This became clear in a document which I have no doubt has come to the hon. Gentleman's attention recently, namely, the document setting out what the Labour Party's policy will be. We shall deal with this as a matter of the utmost priority when we form the next Government. We have made our position on the matter clear beyond peradventure and we shall deal with it in our own way in our own time.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1

STRUCTURAL ALTERATIONS ALLOWABLE FOR FIRE PREVENTION PURPOSES

The cost of structural alterations to premises carried out on the instructions of the fire prevention authorities shall be considered as an expenditure wholly exclusively and necessarily incurred under the Income Tax Acts and be allowed as a deduction for income tax and corporation tax purposes.—[Mr. Joel Barnett.]

Brought up, and read the First time.

Mr. Joel Barnett: I beg to move, That the Clause be read a Second time.

Mr. Speaker: With this new Clause we can discuss also new Clause 38,

Income tax and corporation tax: Allowances for structural alterations for fire prevention purposes.

The cost of structural alterations to premises carried out on the instructions of the fire-prevention authorities in accordance with the pro-

visions of the Fire Precautions Act 1971 shall be considered as an expenditure wholly, exclusively and necessarily incurred under the Income Tax Acts and be allowed as a deduction for income tax and corporation tax purposes.

and new Clause 40,

Tax deduction for structural alterations to prevent fire.

(1) In computing profits or gains or losses for any period of a trade which consists in or includes the provisions of accommodation in a hotel, inn or boarding house or similar establishment there shall be allowed as a deduction any expenditure incurred by the person carrying on the trade in making to any part of a building in which the trade is carried on any structural or other alterations the making of which is requisite as being a step mentioned in a notice served under the Fire Precautions Act 1971 whether or not such expenditure would otherwise be allowed as a deduction.

(2) For the purposes of this section any structural or other alterations made on the recommendation or advice of a fire authority as defined for the purposes of the Fire Precautions Act 1971 shall be treated as if they were alterations the making of which is requisite as being a step mentioned in a notice served under that Act.

Mr. Barnett: The object of new Clause 1 will be obvious from its contents. Other new Clauses go in detail into the question of what is forced on businesses by the Fire Precautions Act, 1971. It is absurd that the Income Tax Acts should be so interpreted that such expenditure is not allowable. Under the Fire Precautions Act there is provision for a £400 fine or, in certain circumstances, a sentence of two years' imprisonment for using premises that have not been structurally altered as prescribed by the Act.
It is possible to obtain tax allowances for some fire prevention equipment, but structural alterations such as the installation of a new door or of a fire escape is not an allowable expense, even though a man cannot stay in business without incurring this expense. I am not talking about premises that are used for the manufacture of goods, because in the case of factory premises all expenditure is allowable under the industrial building allowance scheme. I am talking about expenses incurred in respect of shops, offices, hotels and places of entertainment.
Substantial expenditure is involved and it is not by any stretch of the imagination wholly, exclusively and necessarily incurred for the purposes of trade. It is unlike some expenses. A firm must incur this expense to stay in business, whereas it could well say "We will not


incur certain expenditure on advertising and travelling "and still stay in business.
The question of fire precautions and structural alterations has been highlighted by some of the more recent hotel fire tragedies, though the problem is a continuing one. In 1965 loss through fire damage in the United Kingdom amounted to £75·1 million. By 1971 the figure had risen to £128·7 million. In the distributive trades there were 800 fires in 1958 and the number had risen to 1,740 by 1969. Those figures were taken from the United Kingdom Fire and Loss Statistics for 1969. In public entertainment premises there were 2,988 fires in 1958 and 7,290 in 1969. Clearly there is a growing problem here. When introducing the Fire Precautions Act, the Minister made clear that this was something with which we should be concerned, yet we have a situation in which expenditure which has to be incurred by firms is not allowed as a deductible expense against tax.

6.30 p.m.

I am aware that the Government have a case to make against this proposition and I think I know some of the arguments that will be used, so I shall try to deal with some of them. I think the net result of resisting such a Clause would be to make it more difficult and more costly to take precautions which all hon. Members would wish to be taken. Firms would either seek to avoid carrying out essential work or would delay doing so because they have not the funds available. All of us know of companies which have cash flow problems. If they have funds available they tend to use those funds in a way which will bring a small return. That is understandable and we cannot blame those firms. They would not find it easy to obtain resources and put them to use for a purpose which would bring no return at all.

Such firms might try in the cheapest possible way to do the job on which the Fire Precautions Act insists. I think you Mr. Speaker, when asked for your free advice once said "Cheap is cheap". I am sure you were not referring to cheapness in this context and I am paraphrasing somewhat widely, but undoubtedly firms would try to do this work in as cheap a way as possible, yet here people's lives

are concerned and cheapness could lead to tragedy.

I hope that the Treasury will not use the argument that new Clause 1 and the other new Clauses which are being considered with it are badly drafted. I would be perfectly happy, if the Chief Secretary chose the purport of any of these Clauses, to accept a manuscript Clause from him. He might well use the argument about cost. If the cost involved in accepting the new Clause would be high, that could only mean that many buildings need structural alterations to be done urgently. Most hon. Members will agree that there probably are such buildings. If the cost would be high, there are reasons for that.

If the cost is a trading expense as the cost of other items may be, it is allowable. In such a case the firm cannot trade without undertaking the expense. It seems ridiculous to agree to expense which is allowable as a trading expense and to say that that is because it is wholly, exclusively and necessarily incurred for the firm to stay in business, yet to say that this expense cannot be allowed because it is too costly. That argument does not appear to be justified in any way. There are many allowances in a profit and loss account.

It is a strange argument for the Treasury to say that this expense would not be allowed on the ground that it would be too costly while allowing expenses such as those for travel, entertainment of people from overseas, advertising or repairs. Those expenses are at present allowed under the terms of Schedule E. But repairs, advertising and motoring expenses do not have to be wholly, exclusively and necessarily incurred; they have only to be wholly and exclusively incurred. Although it was not necessary, I have included the word "necessarily" in the Clause. I have done so because this item of expenditure is literally necessarily incurred, because without it a firm could not stay in business. Therefore, to say that one should disallow this expenditure on the ground of cost is an argument which I hope the House will not accept.

Probably the major reason that the Chief Secretary will adopt for resisting the Clause is that it relates to expenditure of a capital nature which would


result m improvement to a building rather than to expenditure of a revenue nature. Of course it could be argued that it would be an improvement to the premises which was not available for capital allowance purposes under the industrial buildings legislation. But improvements to other premises—factory premises for example—are allowable for the purposes of claiming deductions. There is another Clause on the Paper concerning hotels. I have always thought it rather silly not to allow for purposes of capital allowance the construction of a shop front, which is as much an item of expenditure for a firm as any other item. In this case, however, where the improvement has to be carried out it is not allowed. That is not because the firm wants to expend money on improving the premises or in some way to improve its turnover. One would like to think that the public use hotels, offices and places of entertainment because they are safe, but I cannot believe that that is in the mind of the public when they go into those premises. Those premises are being "improved" only because the firm is forced to make those so-called improvements.

I appreciate that there is a problem here. There would be no allowance for the installation of a fire escape or special doors in a factory. However, I believe it would be quite easy for the Government, if they accepted my Clause, to define the part of the building which had been installed purely for fire precaution purposes. It is not difficult to define a fire escape, and the cost of a fire escape would be easy to separate from the cost of the rest of the building. It would be an improvement—using the word in its widestsense—to install a fire escape in a new building and any improvement which was realised on a sale would be subject to capital gains tax, but some relief would have been given before the building was sold. This seems a reasonable thing to suggest because the expenditure would have been incurred at the behest of the Government.

There is the even more absurd situation of the tenant who has to pay for this installation although the landlord receives the benefit if the tenant leaves and the landlord rents off or sells the premises. All round, this seems most unfair to the person or firm carrying on

the trade at the time when the expenditure has to be incurred.

The only other argument that could be put forward by the Government is that this would be unfair to those who have already carried out expenditure on old premises. It is true that they would not receive the allowance, but that argument is worth putting forward only if one intends to resist all changes at any time. Transitional problems always arise when a change is made. Treasury Ministers will know that the new tax that they are bringing in with the cessation of purchase tax raises such problems. I hope we shall have no arguments about transitional difficulties.

There is the question of loss through fire. I have referred to examples in terms of loss in life and money. In the Second Reading debate on the Fire Precautions Bill on 20th November, 1970, the Undersecretary of State said that the Bill made
a significant contribution to reducing fire risks…which present a real human problem."—[Official Report, 20th November, 1970; Vol. 806, c. 1661.]
Nobody on either side of the House would disagree with that, but it would contradict the whole of those arguments if we were to disallow this item of expenditure for tax purposes and so make it more difficult to carry out the very precautions that that Measure was introduced to enable firms to carry out.

Mr. Costain: I represent a constituency which has many small and medium-sized hotels, and I was therefore interested to hear the proposals of the hon. Member for Heywood and Royton (Mr. Joel Barnett). At first sight it would seem reasonable that these tax allowances should be made, but I have had representations from the owners of a number of small hotels who are extremely worried about the effects of the capital expenditure that they would have to undertake in order to comply with the Fire Precautions Act. We passed that Act with the best of intentions, without realising that when fire officers were asked to put forward safety requirements they would not unnaturally put forward the most stringent regulations, because if they did not and a fire took place in premises which complied with their requirements they would get the blame whereas if they were over-cautious nobody would blame them.
The effect has been that some small hotels are faced with proportionately large capital expenditure. Some of these hotels are owned by people who came to Folkestone on retirement to run hotels in order to supplement their pensions. I have discussed with them the proposal that they should be allowed tax relief in order to offset the extra expenditure, and they have laughed and asked me whether I realised that they could not afford the cash to carry out the necessary structural alterations and that the income they were receiving from the hotels made it unlikely that they would be liable for tax anyway. These people are much more interested in receiving a loan or an allowance to help them carry out the necessary work.
They further pointed out, and I agree with them, that the larger and more profitable hotels have already raised their fire precaution standards above those laid down, and that if the new Clause were accepted we should be penalising them—so why should not we allow them tax relief? I hope that my hon. Friend will pay attention to the suggestion that some form of loan or grant should be given to help hotels to carry out the necessary work, instead of concentrating on the saving of capital.

6.45 p.m.

Mr. Dalyell: Hon. Members will recollect the biblical parable of the five wise virgins with their crude oil and the five foolish virgins with their crude oil. It may seem at first sight that this is a case of the foolish virgins being rewarded and the wise virgins being done a bit. I prefer to think of the parable of the prodigal son. Those who have not carried out repairs should be welcomed as prodigals rather than as persons who have failed to carry out their duties. The argument that will be put forward against that suggestion is that it is unfair to those who have carried out the work. I agree with my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett).
The City of Edinburgh has a long and honourable history in terms of fire precautions. We can claim to have had the first professional fire brigade anywhere in the world, under a remarkable fire-master called James Braidwood, in the last century. Frank Rushbrook has just

retired as Edinburgh firemaster. I have talked with him. Considerable expense would have to be borne by hotels in Central Scotland in bringing them up to the standard that they should have attained long ago. We want to hear from the Government what plans they have to enable hotels to comply with the necessary standards.
Do not let us over-state the situation; in many cases repairs would not be all that expensive, but in some cases hotels would go out of business if they had to implement the regulations in respect of their rather ancient premises. I therefore hope to hear a coherent plan from the Government, even if they do not accept the argument.
It is no good saying that we can simply drift along. I warn Ministers that the next time there is a hotel scandal of the kind we have known fairly recently there really will be a public outcry. The Under-Secretary of State for the Home Department, who is present, must know that even now, in certain parts of the country—and I include my own area—many hotels have not registered. The fire brigade does not conceive it as part of its duty to require them to register. That argument has gone on in various parts of the country and the Undersecretary has been asked many questions on the subject.
I should like to be assured that the Government have a coherent view, not only in relation to the new Clause but in respect of hotel finance in general, in terms of fire precautions. It is the general picture to which we must have regard.
We are talking not only about hotels; we are talking about premises in general. I should be more concerned about some factory buildings—the buildings of small firms. I do not want to be irrelevant but I point out that one of the startling facts that emerged from the recent Cold-harbour tragedy was that the fire risk was made greater precisely because modernisation had taken place.
It is not only a question of old premises. We are talking about a large number of premises in which modern equipment, modern installations and particularly modern plastics have been introduced on a large scale in the past 10 years and which tragically are not less but more vulnerable to fire. That was


the lesson of not only Cold-harbour but a number of other recent fires where there was no loss of life. In all the circumstances, great changes may have to be made not only in old buildings but in reasonably up-to-date buildings to bring them up to standard. Therefore expense is important, and we should like to hear in general terms the Government's tax policy in relation to the whole problem.
We cannot leave this general subject without some discussion of the effects on premises that involve the use of chemicals. One of the startling things we notice when we visit fire brigades is the amount of chemical knowledge they must now master. The fire officers have become highly skilled people in our society. With all the changes that result from the changing nature of technology, we should like to know something about the tax policy involved.

Mr. Robert Adley: I should like to speak specifically to new Clause 38, which is in my name and the names of some of my hon. Friends. First I declare an interest, as I have some involvement in the hotel industry, but I point out immediately that what I am concerned about is the plight of small hotel keepers, including the very small hotel keepers, as was my hon. Friend the Member for Folkestone and Hythe (Mr. Costain).
I thank my hon. Friend the Chief Secretary for seeing a number of deputations on behalf of the Parliamentary Tourism Committee, and I also thank my hon. Friend the Under-Secretary of State for the Home Department, who is aware of that committee's concern about the Fire Precautions Act.
The hon. Member for Heywood and Royton (Mr. Joel Barnett) spoke cogently about the plight of some of the small hotels. He concentrated on the need to allow expenditure on fire precautions against taxation. My hon. Friend the Member for Folkestone and Hythe said that what we need is a means of alleviating the hardship of those concerned, but not necessarily by means of taxation allowances. The hon. Gentleman's Clause might help those who need help less but fail to help those who need it most. I hope that my hon. Friend the

Chief Secretary will have noted my hon. Friend's point, which I endorse.
The root of the trouble is that when the Act was being discussed the tourism lobby was perhaps unaware of the problem, and certainly was not sufficiently well organised to mount a campaign to make sure that the possibly harmful financial effects on small hotels could be alleviated.
In the two years since June, 1970, we have spent 48½ hours on the Floor of the House discussing coal mining, but only two hours discussing tourism, although the hotel and catering industry employs 1,200,000 people and has 132,500 employers.
The side effects of the Fire Precautions Act are much wider than was envisaged when it was under discussion. It has involved the Department of Trade and Industry, the Home Office and the Treasury, but we have finished up with the Treasury and we face the possibility of a financial penalty on safety. We all support the Act, as the hon. Member for Heywood and Royton said, but it is important that nothing should be done by one Department to hinder its initial intentions. The Home Office drafted the legislation, but the small hotel keeper is left with the Treasury as his only hope of preventing many of the bankruptcies of which the hon. Member for West Lothian (Mr. Dalyell) spoke.
Many of us who have been involved through our constituents in the past few months could quote many cases of the hardship which will result if the Government do not find a way to provide relief or, more important, to provide funds for the small hotel keeper to carry out the necessary work. Everyone wants the work to be done. The problem is to find a way to make sure that it can be done. I shall not weary the House with numerous quotations from letters I have received, but it is clear that the size of the problem is not understood by the Home Office, the Treasury or the Department of Trade and Industry. This was illustrated by an answer I received from my hon. Friend the Under-Secretary of State for Trade and Industry on 8th May, when I asked what effect he expected the Fire Precautions Act to have upon small hotels. He replied that he could not give an estimate and then told me why he could not do so.
In our discussions with the Treasury we have been asked to give an idea of what we thought such a concession was likely to cost and how many hotels were likely to be involved. Nobody even knows how many hotels there are in the country. One of the advantages of hotel registration, which is being discussed by the Department of Trade and Industry, is that it will enable the Treasury to know the extent of any problem in connection with the hotel industry that is brought to its attention.
The hon. Member for Heywood and Royton rightly pointed out the difference between the lack of allowances on structural work and the allowances on equipment. It is difficult to explain to a small hotel keeper why he can count a fire extinguisher but not a fire escape for taxation purposes. It is in the hope of trying to bring some logic into the situation that we have tabled new Clause 38.
In our discussions at the Home Office about the Act a code of practice has been mentioned. The impression has been given that we should not worry too much about the Act and likely difficulties for small hotels, because the Home Office would issue a code of practice alleviating those difficulties. That has not happened. I should like to read a short extract from a letter from the Glasgow Corporation Fire Department to a hotel company. It says:
I am sure you appreciate the difference between mandatory legislation and a guide. In fact, the guide itself on page 1 states, 'This booklet does not have legal force.' I hope this clarifies the matter for you.
The legislation has had a financially harmful effect and, unless the Government find a way to enable small hotels to carry out the necessary work without going bankrupt, many small hotel keepers will be in great difficulty. If hotels were classified as industrial buildings the problem would be alleviated very quickly. Alternatively tax relief should be provided, although this might not help a man who keeps a really small hotel. Best of all, perhaps, the Government should quickly find a means to provide loans, preferably through the local authorities, so that the small hotel keeper can enjoy benefits similar to those which the Act already gives in respect of private dwellings.

7.0 p.m.

The Minister has told me that I worry too much and that bank loans will be available to these people. But small hotel keepers find it extremely difficult to borrow money from the banks. This is the crux of the problem. Let me read a sentence from a letter which I have received from a small hotel keeper in Bristol. He says:
As a small family hotel we do not have the vast financial resources of a hotel group and we have had to pay for the work out of our takings.
These are the sort of people who need help. If my hon. Friend the Chief Secretary cannot make a tax concession to help such people, let us have some sign that he is prepared to consider a form of loan. I say to him with friendliness but firmness that we look for some form of action rather than ameliorating words.

Mr. John Pardoe: I refer particularly to new Clause 40, tabled by my right hon. and hon. Friend and myself, which seeks to enable hoteliers to set against tax the expense of work done under the Fire Precautions Act. New Clause 39, which has been coupled with others for debate later, would enable hoteliers to claim hotels as being industrial buildings for tax purposes. But that goes much wider. The new Clause under discussion is specifically linked to that expenditure incurred as a consequence of the Fire Precautions Act.
Anyone who speaks for a constituency which has a large tourist interest knows that no one in the tourist industry challenges the necessity for the Fire Precautions Act. Some people have put forward considerable claims for alleviation on financial grounds, but no one has said to me that the Act is not right and necessary. There have been some severe hotel fires in the last few years and every one in the industry and outside recognises the need to protect the people staying in hotels from danger. It came as a shock to the great majority of hon. Members who helped to pass the Act to discover that expenditure incurred in implementing the Act was not allowed against tax. I doubt whether many hon. Members realised that when the Act was passed.
The industry wants to be safe from fires. It wants to protect its guests. But is it being encouraged to do so? I am


aware that it cannot do other than accord with the Fire Precautions Act. It incurs very heavy penalties if it does not conform with the Act, and many small hoteliers and guest house keepers may well be driven completely out of business as a result of it. But there is a difference between honouring the Act in the spirit and honouring it in the letter. We should be encouraging hoteliers to go as far as they can in protecting their guests from fire and even to go further than honouring the strict letter of the Act. Inevitably there will be temptations to cut corners in implementing the Act. One can hardly blame hoteliers, faced with the expenditure which some of us representing tourist areas have had brought to our attention in the last few weeks, for cutting corners.
The Taxes Act allows some relief for expenditure on fire precautions. For instance, it allows relief for expenditure on repairs and maintenance, insurance and management. But, according to the Revenue, replacements and improvements of a capital nature are not admissible. Where exactly is the difference? For example, fire doors may well cost as much as £60 each. A constituent has written to me enclosing a letter from the inspector of taxes in Truro. It concerned the expenditure of £233 on fire doors in a small private hotel. The inspector stated in his letter:
The bill you paid for £233 seems to be an expenditure which is not revenue but capital, i.e. it relates to installation of fire doors which would seem to be an improvement or alteration as opposed to a repair or maintenance".
That is a strange division between the two. I admit that if I had been in my constituent's position I should have been exceptionally puzzled. Suppose she had replaced her doors with modern doors for interior decoration purposes. One might have been able to argue that this was simply in keeping with the interior decoration, and if her interior decorator had been hired professionally and had advised the use of a particular type of modern door one might have been able to persuade the Inland Revenue that this was an allowable expenditure.
Suppose, to get a step further from replacement, she had simply been advised by her interior decorator to add

hardboard panels to the outside of existing doors, not to fireproof them but to make them more in keeping with modern design and modern decoration. I suggest that the cost of adding hardboard panels would have been allowable against tax. If the doors had been lined with asbestos panels, would the difference between hardboard and asbestos make one allowable and the other not allowable? Distinctions of that kind are nonsensical, and the new Clauses have been tabled in an endeavour to clear up the matter.
In replying to some of these points in a letter to me on 28th June, the Chief Secretary said:
There is no universal rule of thumb for deciding on which side of the line any particular item falls".
Some of my constituents have taken legal advice on this matter and their solicitors have argued with great ingenuity exactly where the expenditure lies in relation to the law. Unfortunately, however, the Inland Revenue is proving obdurate and it is extremely difficult to get round the matter.
The Chief Secretary in his letter to me endeavoured to put forward reasons why he did not envisage the Government accepting this suggestion. He said:
I do not think there is justification for singling out this particular form of expenditure for special tax treatment".
He went on to say that there are other industries which have to make their premises not only safe from fire but hygienic. He suggests that some shopkeepers have to incur expenditure in bringing their premises up to the hygiene standards. That is true. But it does not usually involve major construction or the kind of expenditure which many hoteliers are being called upon to make in relation to the size of their turnover; and most work done to bring shop premises up to the hygiene standards is usually an admissible expense. So the comparison is not fair.
What about the possibility of alternative finance which has been suggested today from the Conservative benches? It is extraordinary to find a Conservative Member arguing for some sort of subsidised loans or grants instead of the normal Conservative pleasure ground of tax allowances.

Mr. Adley: I was arguing for loans. We are not asking for grants, and certainly we are not asking for anything of UCS proportions. I remind the hon. Gentleman of a letter which I forwarded to him from his own constituency pointing out that the Newquay chief executive officer informed one of the hon. Gentleman's constituents that grants might be available from local councils but that this applied only to private dwellings and not hotels. That is my point.

Mr. Pardoe: It was partly on the basis of that letter that I made that very point. The Newquay District Hotels and Caterers Association states clearly in its letter that it would much rather have tax allowances than any kind of subsidised handout or loan. On 16th May its chairman wrote to me as follows:
The general feeling amongst our members appears to be that allowances for taxation purposes are a more satisfactory and fairer system…than any grants or loans which may be proposed.
Certainly in my recent experience of the tourist industry tax allowances would be the best way. Some help has been offered from the Small Industries Committee of the Council for Small Industries in Rural Areas. Its chairman wrote to me on 25th April saying that he hoped that the council might be able to help with the provision of a limited number of loans. But of course this would not solve the whole problem.
What is to happen if the Chief Secretary cannot accept the principle contained in the new Clauses? I suggest that one result will be that some smaller guest houses will revert to private use. This has been spelt out in the letter from the chairman of the Newquay hoteliers' association, which says that some of its members are already considering how they can cut down on their upper storey rooms to bring their accommodation within the Act by reducing the number of letting rooms. Surely that is not the Government's intention.
With the support of the then Opposition, the last Government introduced the Development of Tourism Bill. I thought it was a load of nonsense. Largely I have been proved right. Most of the money has gone into the pockets of the large takeover merchants and not into smaller hotels. The objective was to increase

the number of hotel rooms by pumping in the taxpayer's money. Here the Government are refusing to ensure that the number of hotel rooms that we have is kept to the present level. I suggest that the Government will succeed in reducing substantially the number of rooms available for letting in small hotels.

Mr. Rees-Davies: The hon. Member for Cornwall, North (Mr. Pardoe) must give credit where it is due. Does he not realise that as a result of that scheme more than 60,000 bedrooms have been provided which have gone a long way to meet the enormous increase in tourism, with over 7 million visitors in the current year? It was begun under a Socialist Government, but we must give them credit for achieving the objective they had in mind, for the benefit of Liberals and Conservatives.

Mr. Pardoe: The hon. Member for Isle of Thanet (Mr. Rees-Davies) has fallen into the trap of believing that it would not have happened without Government handouts. The fact is that over 60 per cent. of the money has gone to people who would have carried out the developments because of the massive demand for hotel rooms in London and our other major cities. They would have done it without the grants. They did not really need the money. If one is thinking of pumping public money into improving an industry in this way, I believe that it should go to those parts of the industry which cannot carry out the necessary improvements without public handouts. That is why I complained about the Act and forecast what would happen. I have been proved right.
We are proposing, as a result of the Fire Precautions Act, to levy a 60 per cent. tax on the greater part of what is incurred in implementing the Act—[Interruption.] Righthon. and hon. Gentlemen on the Government side look mystified. For their benefit I give the simple details. To put in a £60 door, the hotelier will have to earn £100. He will be taxed £40 on that, and £40 on an expenditure of £60, as the Chief Secretary will know, is more or less what I said at the start of the calculation. If a farmer puts in a farm gate, he pays no tax. If a hotelier puts a new carpet in his hotel, he pays no tax. But a fire door will be charged tax at the rate of 60 per cent. This is madness.

7.15 p.m.

Mr. Patrick Jenkin: This has been an important debate, and I do not wish in any way to prevent those who have points to make, whether on behalf of constituency interests or otherwise, from doing so but I think it may be helpful if I intervene at this stage to give the Government's view on the issues as they have been put so far. If any further points arise, then perhaps, Mr. Speaker. I might seek the leave of the House to reply at a later stage.
I can begin with one point on which I am sure the whole House is united in agreement; namely, the need to make premises to which the public have access as safe from the risks of fire as possible. It was to this end that Parliament passed the Fire Precautions Act last year. It was to this end that the first order applying the Act to hotels and boarding houses was made in February last and came into operation on 1st June. This order was made on the advice of the Central Fire Brigades Advisory Councils for England and Wales and for Scotland. It is the view of those responsible for the protection of the public against fire that the need to bring the standard of fire precautions in hotels and boarding houses to a minimum and acceptable level is urgent. I do not need to remind the House of the tally of hotel and boarding house fires in recent years. Saffron Walden, Bayswater, Cambridge, Hastings are but a few that spring to mind. We all agree, therefore, that it is right to take action.
Second, it is also right that, while the safety of the public must be the overriding consideration, fire precautions should be imposed in a way that is both practical and realistic. The Fire Precautions Act clearly recognised that when, during the Bill's passage through the House, our hon. Friends in the Home Office explained that it was not the intention to apply the Act all at once to all premises within its scope; instead it would be introduced by stages with high risk premises being dealt with first. Further, Ministers gave an undertaking that no orders would be made applying the Act to particular classes of premises until the interests affected had first been consulted and an agreed code of practice drawn up. I can assure the House that the code of practice for hotels and board-

ing houses—although the Amendment covers all premises, I think that it will be agreed that the bulk of this debate has been on the narrower subject—was agreed with national organisations representing the industry before the designating order was made. The House may agree that it is unlikely that the industry would have accepted the code had it been unreasonable.
For instance, the order excludes the smallest premises altogether from its scope; a family which provides sleeping accommodation for six or fewer guests on the first floor is not affected. Again, the Act provides that the fire authority may require only what is reasonable in the circumstances of the case, and its requirements are subject to appeal to the courts. It is right, too, that I should remind the House that when appeals have been considered under similar provisions of comparable legislation—for instance, the Offices, Shops and Railway Premises Act, 1963—the courts have always taken the question of cost into account. Thus, a fire authority cannot demand precautions which cost more than what is reasonable having regard to the nature of the premises. Again, a fire certificate must be tailor-made for each industrial building: there is no question of regulations being applied rigidly regardless of the individual characteristics of a particular building and the way in which it is used.
Again, I emphasise that the requirements must relate solely to means of escape and associated fire precautions. They are concerned primarily not with the protection of property but with the protection of life. Thus no fire authority could require a small hotel or boarding-house keeper to fit, for instance, a sprinkler system, for such a system is primarily for the protection of property.
The point here is that within the overriding need to protect human life it was the purpose of Parliament, and, therefore, the intention of the Department, that the Act should be applied reasonably and gradually and only after full consultation and subject to rights of appeal. My right hon. Friend the Home Secretary, who carries the responsibility in these matters, has authorised me to emphasise this today. I very much welcome the presence of my hon. Friend the Under-Secretary of


State for the Home Department on the Front Bench beside me.
Furthermore, the fire service is well aware of all this. Nevertheless, the Home Office has thought it right in recent months to arrange special seminars on the Act for chief fire officers and others, and conferences have been held in different parts of the country. In all this it has constantly been stressed by the Home Office, and accepted by the fire service, that all circumstances must be taken into account, including financial considerations, before requirements under the Act are specified. In addition, my hon. Friend the Under-Secretary of State for the Home Department has personally put to the Central Fire Brigades Advisory Councils the difficulties faced by the proprietors of the smaller hotels and boarding-houses. Aspecial circular, which a number of hon. Members may have seen, was last month sent to fire authorities drawing attention to the problem and suggesting that they might arrange local conferences with hotel and boarding-house keepers at which these matters could be discussed.
Of course, the Government have in the last resort no power to direct the fire authorities; it is they who are vested by law with the responsibility for implementing the Act. But my right hon. Friend the Home Secretary has authorised me to say that he is fully satisfied, following the discussion in the Central Fire Brigades Advisory Council and the sending of the circular, with the Council's backing, to all fire authorities, that the problems of the small establishments in particular are well understood and recognised by those authorities. In respect both of the requirements to be imposed and of the time to be allowed for carrying out the work, it is always open to hotel and boarding-house keepers to discuss their difficulties with the fire authority. My right hon. Friend has no doubt that they will be given a sympathetic hearing.
One other anxiety has been expressed; namely, that differing standards will be imposed by different fire authorities. My right hon. Friend wishes me to underline the fact that by the publication of a code of practice, through special training courses and in other ways, the Home Office has been at considerable pains to ensure uniformity of standards. This has

been carried out with the full agreement and co-operation of all sections of the fire service itself, and my right hon. Friend has no doubt whatever that the fire brigades, with their unrivalled record of public service, will discharge their duties under the Act with the same efficiency and consideration which characterise their other activities. In view of all this, I believe I am right in claiming that some of the wilder cries of alarm which have been heard in recent weeks will turn out to have been unjustified.
However, I go on at once to acknowledge that fire precautions, even if reasonable and carried out over a period, will cost money. I believe, again, that I am on firm ground when I assert that it has for long been a settled principle in such matters that where the law requires premises to which the public are invited to be made safe, the financial responsibility for complying with the law rests on the proprietors. We have, for instance, for years had legislation, as the hon. Member for Cornwall, North (Mr. Pardoe) acknowledged, applying standards of hygiene and public health to many types of premises. It has never been felt right, merely because these requirements are imposed by law, to transfer any part of the costs of complying with them to the public purse. Indeed, it would be very unfair. Very many proprietors of many different kinds of premises that are or will be covered by the Fire Precautions Act have already taken the necessary steps, perhaps years ago, to make their premises safe. It would, I think, be justifiable ground for complaint if those who have not done this were to receive unduly favoured treatment simply because new statutory regulations have come into force.
However, I recognise that this is not the case which hon. Members on both sides of the House have put forward. Instead, they have sought to argue that the tax rules should be changed so as to allow all expenditure of whatever nature undertaken to comply with the Fire Precautions Act to be a deduction for tax purposes. I understand this argument. Of course, a good deal of this expenditure qualifies already. Much of the equipment which might have to be installed under the Act, for instance, qualifies as plant and machinery for 100 per cent. first-year capital allowances. This


would include, for instance, fire extinguishers, alarm systems, emergency lighting, hoses and hose reels, including plumbing back to the point on the main, some types of escape apparatus, and so on. Again, there will be some work which can be classified as replacements or renewals of a revenue nature and which will qualify as a deduction under the normal expenses rule.

Mr. Joel Barnett: On that basis, is the Chief Secretary now giving some indication to the Revenue that the replacement of one type of door which is not as safe as another would be an allowable deduction?

Mr. Jenkin: It is always a question of fact in each case. It depends how far the particular work that is carried out is a repair or a renewal and how far it is to be regarded as an improvement. I will come to capital expenditure later. This is a basic principle of revenue law which covers a vast area of expenditure by businesses, trades and professions. It would be wrong for any Minister to attempt to indicate to or influence the Inland Revenue how it should carry out its responsibility in this regard. I understand the problem mentioned by the hon. Member for Cornwall, North. A fire door may be a good case in point. If it is merely the replacement of an existing door with no substantial element of improvement, I have little doubt the inspector would find no difficulty in allowing it. However, if it represents a significant improvement so that, in effect, it is different from what it has replaced, it would be regarded as capital expenditure. I recognise that there will be certain types of expenditure which are neither revenue nor able to be classified as plant and machinery for which, as the law stands, there can be no tax relief.
Here I must ask the House to look at the structure of our taxing Statutes as a whole. For very many years there were no capital allowances as such at all. Then in 1945 Parliament introduced a system of capital allowances which, through all the many variations since then, have always been limited to plant and machinery or to industrial buildings and structures. Commercial buildings of whatever nature have never been within the capital allowances arrangements.
There are two main reasons for this. First, commercial buildings on the whole do not depreciate as rapidly or as inevitably as does plant and machinery and as do industrial buildings. On the contrary, one does not need to look more than a mile or so from this House to realise that certain types of commercial buildings, far from depreciating, can appreciate very substantially. I suggest it would be somewhat unreal for the tax system to provide depreciation allowances in these circumstances.
More important, however—this is a reason whose compelling force has been accepted by successive Governments—the cost of extending capital allowances to commercial buildings generally cannot be accepted. If such allowances were given generally, the cost would rise to between £250 million and £300 million per year. This would mean, for instance, that to maintain the yield from corporation tax, instead of the 50 per cent, rate which we have used for illustrative purposes under the system that will come into force next year, the rate might have to be nearer 60 per cent. I believe the House would regard this as wholly unacceptable. But it is argued, and has been argued this afternoon, that this is quite unnecessary. A line can be drawn which would separate expenditure on fire precautions over all other expenditure on commercial buildings and structures. If this were so it would be an argument of some force, because the cost to the revenue of allowing expenditure of this sort would be very much less than the figures which I have mentioned, but the advice which we have received is that it would, in practice, be exceedingly difficult, if not impossible, to draw a line between what would qualify and what would not.

7.30 p.m.

It would be easy enough where alterations of an existing building are being made and are confined to those required by a fire authority. Naturally, since this is the particular case to which attention has been focused in recent weeks, this might appear at first blush to be a reasonable solution. But what one has to remember when claims are made for special allowances for tax purposes is that the tax system applies to about 25 million taxpayers, and that as far as possible it


must treat those in like circumstances in a like way.

I put it to the House whether it would be possible to have an allowance in respect of alterations to comply with fire precautions and have no allowance at all for new buildings which were built to comply with those specifications. I suggest not. The hon. Member for Cornwall, North suggested a way round this. He suggested that possibly one could separate that part of the cost of a new building which was attributable to compliance with a fire authority's requirements; but I suggest that that, too, would be a wholly impossible task, and, bearing in mind that one would be dealing with inspectors and tax officers all over the country, and dealing with thousands of taxpayers, I suggest that it would be wrong to try to impose that task on the Inland Revenue.

Suppose we gave an allowance for hotels and boarding houses. How could we justify withholding a similar allowance for other commercial buildings to which the public have access—theatres, cinemas, offices, shops—

Mr. Adley: That used to be the Treasury argument until the passing of the Development of Tourism Act. The Treasury said that one could not give any allowance to hotels or make arrangements for hotels because nobody knew what an hotel was. The previous Government having passed the Development of Tourism Act, it is clear what is an hotel. With respect to my hon. Friend, I think that there is some difference between a cinema and an hotel.

Mr. Jenkin: I reiterate the point that I made, that adding something to an existing tax system which covers millions of taxpayers is a different operation from separating a particular sector of the economy and legislating for it separately under an entirely different Act and administering it in a different way. I assure my hon. Friend that if one were to attempt to give an allowance of the sort which has been claimed here for hotels and write it in as part of the tax Statutes, not only would it be extremely difficult to draw the line, but it would inevitably spill over to affect the other kinds of premises. I do not deny that it is possible to distinguish a cinema from

an hotel, but that is not the point. The point is that once something has been conceded for hotels, inevitably the pressure will be on to concede it equally for cinemas, offices, theatres, shops, and so on.
I have been driven to the conclusion, however sympathetic one might be to the case that has been made, that any attempt to shift the line of demarcation away from the broad distinction between industrial and non-industrial buildings would be bound sooner or later to lead to all commercial buildings qualifying for capital allowances. I should have thought that that would be unacceptable, on grounds of cost, to both sides of the House.
A sum of £250 million to £300 million a year would be at stake. If right hon. and hon. Gentlemen opposite intend to vote for the Clause I think that they owe it to the House to explain how they propose to meet the cost or how they propose to draw a new line and hold it against what I believe would become irresistible pressure to extend the allowance until it covered all commercial buildings, and I must advise the House to reject the Clause.
Nevertheless, I go on to make it clear that I recognise that there is a problem which has to be met. It is a problem mainly affecting small hotels and boarding houses, and a number of my hon. Friends have emphasised that this afternoon. They have said that some of the proprietors of these small establishments will find it very difficult to meet the requirements of the Fire Precautions Act solely from their own resources. It is common knowledge that there are many thousands of small hotels and boarding houses whose owners draw from them only a very modest living and who have not foreseen the demands of the Act. These are people who have had to apply for a certificate under the designating order, and in due course their premises will be inspected and work may be necessary to obtain afire certificate. Some, those in a more substantial way of business and with access to bank lending and so on, will find little difficulty in complying with the Act. But others who are in a small way of business may face a heavy burden, heavy, that is, compared with the income which they derive from these small establishments.


I believe that this is a case which must be met. It is clear that tax relief would be of limited value in these cases. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) and my hon. Friend the Member for Bristol, North-East (Mr. Adley) emphasised this. Many of these proprietors have incomes of little more than their personal allowances. Indeed, it is common knowledge that in some cases such people have to resort to social security during the winter months.
What seems to me to be necessary is to provide such people with access to loan finance so that they can have the work carried out as and when required by the fire authorities. I am therefore able to tell the House that early in the next Session of Parliament the Government intend to introduce legislation to this effect. Under Section 36 of the Fire Precautions Act, 1971, local authorities can make loans at the Government lending rate to certain categories of proprietor mainly of residential flats.
The legislation which I am announcing will enable us to extend this borrowing facility to the proprietors of small hotels and boarding houses which provide only a small livelihood. I cannot today give the House the full details of this scheme. We have to hold consultations with local authorities on the administration of the proposed power. In addition, further study is necessary to enable us to settle the details.
I can, however, say that the essence of the new facility will be that local authorities will have a discretion to act in the rôle of lender of last resort for a small hotel or boarding-house keeper who finds it difficult to borrow the money he needs from other sources. It is not our intention to help those who can turn to the normal sources of funds—the banks, and so on. We shall, therefore, impose an upper limit; this might be by reference to the number of bedrooms or, alternatively, to the value of turnover. It is for consideration whether, to avoid undue administration, there might be a threshold figure, but, if so, it would have to be a low one.
All this is for further consideration and discussion, notably with the local authorities. The Government, however, for their part are ready to introduce the

necessary legislation early in the new Session, and it is our hope that it can become law just as swiftly as possible. I hope the House will agree that a scheme of this sort, tailored as it will be to meet the precise situation which many hon. Members on both sides of the House have put to the Government in recent weeks, is the right way of avoiding hardship for people in a small way of business who may not have foreseen the need for this expenditure and for whom tax relief would be of little value. It would supplement the arrangements already being made by the industry.
If the House accepts, as I hope it will, that what I have said goes a long way to meet the case that has been put, right hon. and hon. Gentlemen opposite may feel that they need not press the Clause.

Dame Irene Ward(Tynemouth): I should like to take this early opportunity of thanking the Chief Secretary for his imaginative and creative plan. It is true that we do not know all the details, but my heart always warms when I hear action being taken to help those who, out of their own resources, have helped themselves to earn a livelihood.
The House of Commons is a peculiar place. I have been a Member now for 36 years and I cannot remember a single occasion on which a Chief Secretary, supported by a very distinguished Undersecretary at the Home Office, has acted with such speed. It is the most extraordinary thing I have ever seen done in parliamentary life, and I congratulate my hon. Friend on his speed and engenuity. I therefore hate to tell him that it has given me a wonderful idea of increasing speed on many other occasions. At any rate, when a need is urgent—and to small hotel and boarding-house keepers these fire precaution regulations are a matter of great concern—it is very satisfying to know that the Chief Secretary can act with such speed.
My hon. Friend has made some very important points. I have had a large number of letters from constituents and it is quite exciting to know that, though we have talked about Cornwall and all sorts of wonderful places but not talked about the North-East Coast, the North-East Coast will be very grateful for being included in this very important announcement.
It is always very difficult to get those living on small fixed incomes to know what their rights are and how they can make their personal communications. I have always thought that all Governments pay far too much attention to the "big boys" who find it very easy to put in their demands, while those who are not so well off and who deserve all we can give them have neither the knowledge nor the facility.
We shall have a variety of fire precautions officers serving an area and trying to abide by a common code, and I do not think that anybody will be better pleased than those who are living, or trying to live, on small fixed incomes, by the knowledge that something is to be done to help them continue their good work in living on their own resources and running a satisfactory hotel and boarding-house industry.
Even if I have to disagree with my hon. Friend in the future, I hope that he will accept what I say as a very sincere vote of thanks from all of us who have been working very hard behind the scenes. Curiously enough, it is not always outside publicity that gets action from any Government, so we are very pleased indeed to have had such a success.

7.45 p.m.

Mr. Joel Barnett: I hope I may have leave of the House to speak again. It is very interesting to hear the hon. Lady the Member for Tynemouth (Dame Irene Ward) in her unusual rôle in thanking the Chief Secretary. I do not know what he felt about it, but I can only think that her heart warms easily.
I noted with interest that Government supporters were satisfied with the Chief Secretary's concession, but let us see what it amounts to. The hon. Gentleman told us that there would be a loan for small hoteliers, and he preceded that statement by telling us that those hoteliers were doing so badly that they earned just about enough to cover their personal allowances and that some were on social security. Presumably, therefore, they will repay this munificent loan out of social security. This great concession is a loan which presumably will be repayable. I do not know whether it will be subject to interest but, if so—

Mr. Patrick Jenkin: I thought I made it clear that loans under Section 36 of the Act were at the Government lending rate and that the same would apply to this new loan.

Mr. Barnett: That is even more interesting, because under the Bill the first £35 of interest will not be allowable against tax. It will not be protected interest, because the expenditure for which it is incurred is not allowable for tax. Therefore, the first £35 of interest of this great concession will not even be an allowable expense for tax. It is quite incredible. Yet this announcement is greeted with great glee by the Chief Secretary's hon. Friends and by the hon. Lady.

Mr. Peter Rees: The hon. Gentleman has surely misunderstood the position. The interest will be allowable either as business interest or as interest on expenditure to improve real property. I am sure that as an accountant he would like to correct what he said.

Mr. Barnett: On the contrary. The commercial expenditure on the commercial property about which we are talking is not an allowable expense, so it is not a business expense. If I am wrong I shall be delighted to be told. The hon. Gentleman must accept that expenditure incurred in improving commercial property is not allowable, and we have been told earlier—

Mr. Jenkin: In order to prevent the hon. Member for Heywood and Royton (Mr. Joel Barnett) plunging any deeper into the mire of his own creation, I can assure him that in the case we have been talking about it will be protected interest and it will be allowable.

Mr. Barnett: That is a very interesting intervention because earlier the Chief Secretary said that he would not tell the Inland Revenue what was protected or not protected or what was allowable or not allowable. He now says that he is instructing the Inland Revenue as to what is protected and what is not. I am delighted to hear it: we are having changes in the Income Tax Acts all the time.
The main argument advanced by the Chief Secretary was based on cost, to which I had earlier referred. First of all, he tried to frighten us with a cost of £250


million or £300 million—not if he allowed the new Clause but if, because of accepting it, he accepted its logic. That is most interesting because he is now telling us that the Treasury and the Inland Revenue are becoming logical.
Earlier today they did not have quite that sort of logic. When my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) told them that when they were making a concession on television rentals they were arguing that the principle of double taxation was wrong for rentals generally and that all the Chief Secretary was doing was conceding the case for television rentals and for nothing else, the reply was that this was a specific case that could be defined.
We are here saying that it is very easily possible to define what is expenditure under the Fire Precautions Act. As the hon. Member for Cornwall, North (Mr. Pardoe) said, it was interesting to note, in view of the hotels in his constituency, that the Minister of State, Treasury did not reply to the debate on this new Clause. It will have been noted with great interest how, instead of having a logical tax system, this magnificent new loan system will be a great help.
I note with interest what the hon. Member for Bristol, North-East (Mr. Adley) will do. He talked about the illogical nature of the tax system which disallowed this sort of expenditure, which is a trading expenditure, while allowing other sorts of expenditure such as all the other items to which I have previously referred. But now, presumably, he will be satisfied with this little sop he has had thrown to him. Presumably, the hoteliers in his constituency will be coming to him in a year or two saying "Will you please try to get another Bill passed like the Industry Bill to ensure that I do not have to repay the loan?".

Mr. Adley: I have not been a Member of the House as long as the hon. Gentleman. I am thankful for small mercies. If I were at present considering whether

to press my new Clause to a Division, having listened to the hon. Gentleman I find that he has almost made up my mind that it would not be worth doing so, even without the concession. I am extremely grateful to my hon. Friend the Chief Secretary. In the short time available he has done something and, since he has shown his willingness to do something, there is no reason why in the future we should not expect much more.

Mr. Barnett: I had a feeling that was what the hon. Gentleman would say. I hope it will do him good in some places, but I doubt it. When it comes to the crunch and when those small hoteliers on social security in his constituency find that they have to repay these loans, they will see that the concession is nothing like as good as what the hon. Gentleman and his hon. Friends are so happy to accept as a major new concession from the Treasury Bench.

Mr. Adley: Mr. Adleyrose —

Mr. Barnett: The Chief Secretary said thata great deal of expenditure in this respect was now allowable, for example fire extinguishers and other items. He called that a great deal of expenditure. But he knows very well that the bulk of the really costly expenditure is not allowable—that is, structural alterations and fire escapes. This is the big difference.
I find it incredible that hon. Members on the Government side have made such a fuss about an issue that has involved and could involve not only millions of £s lost through fire damage but, tragically, the loss of lives through lack of fire precautions.
For those reasons, I hope that my right hon. and hon. Friends will support the new Clause, which we shall certainly press to a Division.

Question put,That the Clause be read a Second time: —

The House divided: Ayes 185, Noes 202.

Division No. 281.]
AYES
[7.53 p.m.


Abse, Leo
Barnes, Michael
Boyden, James (Bishop Auckland)


Albu, Austen
Barnett, Guy (Greenwich)
Broughton, Sir Alfred


Allaun, Frank (Salford, E.)
Barnett, Joel (Heywood and Royton)
Brown, Bob (N'c'tle-upon-Tyne.W.)


Allen, Scholefield
Baxter, William
Brown, Hugh D. (G'gow, Provan)


Archer, Peter (Rowley Regis)
Benn, Rt. Hn. Anthony Wedgwood
Brown, Ronald (Shoreditch &amp; F'bury)


Ashton, Joe
Blenkinsop, Arthur
Campbell, I. (Dunbartonshire, W.)


Atkinson, Norman
Booth, Albert
Cant, R. B.


Bagier,Gordon A. T.
Bottomley. Rt. Hn. Arthur
Carter. Ray (Birmingh'm, Northfield)




Carter-Jones, Lewis (Eccles)
Johnson, James (K'ston-on-Hull, W.)
Probert, Arthur


Castle, Rt. Hn. Barbara
Johnson, Walter (Derby, S.)
Rankin, John


Clark, David (Colne Valley)
Johnston, Russell (Inverness)
Rees, Merlyn (Leeds, S.)


Cocks, Michael (Bristol, S.)
Jones, Barry (Flint, E.)
Rhodes, Geoffrey


Concannon, J. D.
Jones, Dan (Burnley)
Roberts, Albert (Normanton)


Corbet, Mrs. Freda
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Roberts, Rt.Hn.Goronwy (Caernarvon)


Cox, Thomas (Wandsworth, C.)
Jones, Gwynoro (Carmarthen)
Roper, John


Crossman, Rt. Hn. Richard
Jones, T. Alec (Rhondda, W.)
Rose, Paul B.


Cunningham, G. (Islington, S.W.)
Judd, Frank
Ross, Rt. Hn. William (Kilmarnock)


Dalyell, Tam
Kaufman, Gerald
Sheldon, Robert (Ashton-under-Lyne)


Davidson, Arthur
Lambie, David
Shore, Rt. Hn. Peter (Stepney)


Davies, Ifor (Gower)
Lamborn, Harry
Short, Rt.Hn.Edward(N'c'tle-u-Tyne)


Davis, Clinton (Hackney, C.)
Latham, Arthur
Silkin, Rt. Hn. John (Deptford)


Davis, Terry (Bromsgrove)
Lawson, George
Silkin, Hn. S. C. (Dulwich)


Deakins. Eric
Leadbitter, Ted
Silverman, Julius


de Freitas, Rt. Hn. Sir Geoffrey
Lee, Rt. Hn. Frederick
Skinner, Dennis


Dempsey, James
Leonard, Dick
Small, William


Doig, Peter
Lestor, Miss Joan
Spearing, Nigel


Dormand, J. D.
Lever, Rt. Hn. Harold
Spriggs, Leslie


Driberg, Tom
Lewis, Ron (Carlisle)
Stallard, A. W.


Duffy, A. E. P.
Lipton, Marcus
Steel, David


Dunnett, Jack
Lomas, Kenneth
Stewart, Donald (Western Isles)


Eadie, Alex
Lyon, Alexander W. (York)
Stoddart, David (Swindon)


Ellis, Tom
Mabon, Dr. J. Dickson
Stonehouse, Rt. Hn. John


Fitch, Alan (Wigan)
McElhone, Frank
Strang, Gavin


Fletcher, Raymond (Ilkeston)
McGuire, Michael
Summerskill, Hn. Dr. Shirley


Fletcher, Ted (Darlington)
Mackenzie, Gregor
Thomas, Jeffrey (Abertillery)


Foot, Michael
Maclennan, Robert
Thomson, Rt. Hn. G. (Dundee, E.)


Ford, Ben
McMillan, Tom (Glasgow, C.)
Tinn, James


Fraser, John (Norwood)
Marsden, F.
Tomney, Frank


Freeson, Reginald
Marshall, Dr. Edmund
Torney, Tom


Galpern, Sir Myer
Mason, Rt. Hn. Roy
Tuck, Raphael


Garrett, W. E.
Meacher, Michael
Urwin, T. W.


Gilbert, Dr. John
Mellish, Rt. Hn. Robert
Varley, Eric G.


Ginsburg, David (Dewsbury)
Mendelson, John
Wainwright, Edwin


Golding, John
Mikardo, Ian
Wallace, George


Grant. John D. (Islington, E.)
Millan, Bruce
Watkins, David


Griffiths, Will (Exchange)
Miller, Dr. M. S.



Grimond, Rt. Hn. J.
Morgan, Elystan (Cardiganshire)
Wellbeloved, James


Hamilton, William (Fife, W.)
Morris, Alfred (Wythenshawe)
Wells, William (Walsall, N.)


Hamling, William
Morris, Charles R. (Openshaw)
White, James (Glasgow, Pollok)


Hannan, William (G'gow, Maryhill)
Morris, Rt. Hn. John (Aberavon)
Whitehead, Phillip


Harper, Joseph
Moyle, Roland
Whitlock, William


Harrison, Walter (Wakefield)
Mulley, Rt. Hn. Frederick
Willey, Rt. Hn. Frederick


Hart, Rt. Hn. Judith
O'Halloran, Michael
Williams, Mrs. Shirley (Hitchin)


Hattersley, Roy
O'Malley, Brian
Williams, W. T. (Warrington)


Healey, Rt. Hn Denis
Oram, Bert
Wilson, Alexander (Hamilton)


Horam, John
Orme, Stanley
Wilson, Rt. Hn. Harold (Huyton)


Houghton, Rt. Hn. Douglas
Oswald, Thomas
Wilson, William (Coventry, S.)


Hughes, Robert (Aberdeen, N.)
Palmer, Arthur
Woof, Robert


Hunter, Adam
Pardoe, John



Irvine,Rt.Hn.SirArthur(Edge Hill)
Parker, John (Dagenham)
TELLERS FOR THE AYES:


Janner, Greville
Pavitt, Laurie
Mr. Donald Coleman and


Jeger, Mrs. Lena
Pentland, Norman
Mr. James Hamilton.


Jenkins, Rt. Hn. Roy (Stechford)
Prescott, John



John, Brynmor
Price, J. T. (Westhoughton)





NOES


Astor, John
Chichester-Clark, R.
Fidler, Michael


Atkins, Humphrey
Churchill, W. S.
Finsberg, Geoffrey (Hampstead)


Awdry, Daniel
Clark, William (Surrey, E.)
Fisher, Nigel (Surbiton)


Barber, Rt. Hn. Anthony
Clegg, Walter
Fletcher-Cooke, Charles


Batsford, Brian
Cooke, Robert
Fookes, Miss Janet


Beamish, Col. Sir Tufton
Corfield, Rt. Hn. Sir Frederick
Fortescue, Tim


Bell, Ronald
Cormack, Patrick
Foster, Sir John


Benyon, W.
Costain, A. P.
Fox, Marcus


Berry, Hn. Anthony
Critchley, Julian
Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)


Biggs-Davison, John
Crouch, David
Fry, Peter


Blaker, Peter
Crowder, F. P.
Gardner, Edward


Body, Richard
d'Avigdor-Goldsmid.Maj.-Gen. James
Gibson-Watt, David


Boscawen, Robert
Dean, Paul
Gilmour, Ian (Norfolk, C.)


Bossom, Sir Clive
Deedes, Rt. Hn. W. F.
Glyn, Dr. Alan


Bowden, Andrew
Digby, Simon Wingfield
Godber, Rt. Hn. J. B.


Bray, Ronald
Dixon, Piers
Goodhart, Philip


Brinton, Sir Tatton
Dodds-Parker, Douglas
Gorst, John


Brown, Sir Edward (Bath)
Dykes, Hugh
Gower, Raymond


Bryan, Sir Paul
Elliot, Capt. Walter (Carshalton)
Grant, Anthony (Harrow, C.)


Buck, Antony
Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Gray, Hamish


Bullus, Sir Eric
Emery, Peter
Green, Alan


Butler, Adam (Bosworth)
Eyre, Reginald
Grieve, Percy


Campbell, Rt.Hn.G.(Moray&amp;Nairn)
Farr, John
Griffiths, Eldon (Bury St. Edmunds)


Carr, Rt. Hn. Robert
Fell, Anthony
Gummer, J. Selwyn


Chapman, Sydney
Fenner, Mrs. Peggy
Gurden, Harold







Hall, Miss Joan (Keighley)
Mitchell,Lt.-Col.C.(Aberdeenshire.W)
Shelton, William (Clapham)


Hall, John (Wyeombe)
Mitchell, David (Basingstoke)
Simeons, Charles


Hall-Davis, A. G. F.
Moate, Roger
Sinclair, Sir George


Hamilton, Michael (Salisbury)
Monks, Mrs. Connie
Skeet, T. H. H.


Harrison, Col. Sir Harwood (Eye)
Monro, Hector
Soref, Harold


Havers, Michael
Montgomery, Fergus
Speed, Keith


Hawkins, Paul
Morgan, Geraint (Denbigh)
Spence, John


Higgins, Terence L.
Morgan-Giles, Rear-Adm.
Sproat, Iain


Hiley, Joseph
Morrison, Charles
Stanbrook, Ivor


Hill, John E. B. (Norfolk, S.)
Murton, Oscar
Stewart-Smith, Geoffrey (Belper)


Hill, James (Southampton, Test)
Neave, Airey
Stoddart-Scott, Col. Sir M.


Holland, Philip
Noble, Rt. Hn. Michael
Stokes, John


Hordern, Peter
Normanton, Tom
Stuttaford, Dr. Tom


Hornby, Richard
Nott, John
Tapsell, Peter


Hornsby-Smith.Rt.Hn.Dame Patricia
Oppenheim, Mrs. Sally
Taylor,Edward M.(G'gow,Cathcart)


Howell, Ralph (Norfolk, N.)
Osborn, John
Taylor, Frank (Moss Side)


Hunt, John
Owen, Idris (Stockport, N.)
Tebbit, Norman


Hutchison, Michael Clark
Page, Rt. Hn. Graham (Crosby)
Temple, John M.


James, David
Parkinson, Cecil
Thomas, John Stradling (Monmouth)


Jenkin, Patrick (Woodford)
Peel, John
Thomas, Rt. Hn. Peter (Hendon, S.)


Jessel, Toby
Percival, Ian
Tilney, John


Johnson Smith, G. (E. Grinstead)
Pink, R. Bonner
Trafford, Dr. Anthony


Kellett-Bowman, Mrs. Elaine
Powell, Rt. Hn. J. Enoch
Trew, Peter


Kershaw, Anthony
Price, David (Eastleigh)
Tugendhat, Christopher


King, Evelyn (Dorset, S.)
Prior, Rt. Hn. J. M. L.
Turton, Rt. Hn. Sir Robin


King, Tom (Bridgwater)
Proudfoot, Wilfred
Vaughan, Dr. Gerard


Kinsey, J. R.
Pym, Rt. Hn. Francis
Walder, David (Clitheroe)


Knox, David
Quennell, Miss J. M.
Walker, Rt. Hn. Peter (Worcester)


Lamont, Norman
Raison, Timothy
Walker-Smith, Rt. Hn. Sir Derek


Lane, David
Ramsden, Rt. Hn. James
Ward, Dame Irene


Le Marchant, Spencer
Rawlinson, Rt. Hn. Sir Peter
Warren, Kenneth


Longden, Sir Gilbert
Redmond, Robert
Weatherill, Bernard


Loveridge, John
Reed, Laurance (Bolton, E.)
Wells, John (Maidstone)


McAdden, Sir Stephen
Rees, Peter (Dover)
Wiggin, Jerry


MacArthur, Ian
Rees-Davies, W. R.
Wilkinson, John


McCrindle, R. A.
Ridsdale, Julian
Winterton, Nicholas


McLaren, Martin
Roberts, Michael (Cardiff, N.)
Wood, Rt. Hn. Richard


McNair-Wilson, Michael
Roberts, Wyn (Conway)
Woodhouse, Hn. Christopher


McNair-Wilson, Patrick (New Forest)
Rossi, Hugh (Hornsey)
Worsley, Marcus


Madel, David
Rost, Peter



Marten, Neil
Russell, Sir Ronald
TELLERS FOR THE NOES:


Mather, Carol
Scott-Hopkins, James
Mr. Victor Goodhew


Maude, Angus
Sharples, Sir Richard
and Mr. Michael Jopling.


Maxwell-Hyslop, R. J.
Shaw, Michael (Sc'b'gh &amp; Whitby)

Question accordingly negatived.

New Clause 2

LUNCHEON VOUCHERS

Employees shall be entitled to a luncheon voucher free from any liability to income tax provided that no voucher shall exceed 30 pence in value and no more than one per working day shall be allowed.—[Mr. Sheldon.]

Brought up, and read the First time.

Mr. Sheldon: I beg to move, That the Clause be read a Second time.
This Clause seeks to obtain for employees the use of luncheon vouchers which will be free from liability to income tax, and the intention is to increase the value of the voucher which is free from liability to income tax from 15p. to 30p.
Briefly, to give some of the background to the Clause, the whole of this field of operations started during the last war when there was a major expansion of industry and as a result, with the very

long hours of overtime being worked, industrial canteens grew in size and inscope to allow people to have their meals at their place of work so that the production that was necessary in wartime was obtained. Those who had no such canteen found themselves in a rather unenviable position by comparison with those who did. So in lieu of subsidised canteen facilities other firms started giving an allowance in lieu.
As might be expected under those conditions, the practice grew in a rather higgled-piggledy manner. Certain inspectors of taxes allowed certain sums of money as an allowable expense, while others allowed a much more limited sum of money as an allowable expense for a luncheon voucher. So the situation went on until it was resolved, I understand, in 1948 when the level was fixed at 15p.
The CBI this year suggested that it might be increased from 15p to 30p because of the level of inflation. The present position is that the value of the luncheon voucher in real terms has declined steadily over the years until at the


present time it looks as if it will not be long before the amount that it will buy, far from being a solid lunch which it was at one time meant to purchase, will be little more than tea and a bun. We feel that it is now time that it should be brought up to date.
There is one element which is of importance. This is a concession that was introduced by the Inland Revenue, and it needs to be in statute form. It is suitable and right that the House of Commons should debate what is the right amount of money for a luncheon voucher which people should be allowed to claimas relief from tax.
I will now come to the scope of the luncheon voucher scheme. It might lead to some sort of understanding of the extent of the problem and the way in which it might best be met. There are 19 million luncheon vouchers issued in a year. As I said before, the limit allowed against tax is 15p. The total number of luncheon vouchers is increasing at a steady rate of 8 per cent. or 9 per cent. a year, and at present it is far from saturation point.
Some people realised the value of a more solid mid-day meal than that which is provided by sandwiches, and tribute should be paid to Sainsbury's stores, which in the early 1930s had luncheon rooms, a method of operation which was much updated by Marks & Spencer luncheons for the same type of people, which led to a notable improvement in the facilities that were available. The luncheon voucher scheme, it should be remembered, is run by a number of shareholders of catering firms. Basically these are Associated British Foods, Grand Metropolitan Hotels, Trust Houses Forte and J. Lyons. So the luncheon voucher is a recognised system of operations, though there are others. There are, I understand, 300 other firms with their own schemes, but Luncheon Vouchers, covering so many of the large caterers, is the main national organisation.
What concerns me personally is its extension in recent years into the provinces. The Luncheon Vouchers people say that there is room both for luncheon vouchers and canteens. They say that in their opinion canteens are the best solution to this kind of problem. People going from early morning till late evening require some sustenance during the day, and they are best able to get that by

means of an industrial or factory or office canteen. The Luncheon Vouchers people say that their limited objective is the provision of some sort of facility for firms which cannot, for one reason or another, undertake the provision of those facilities.
Luncheon Vouchers makes a 1¼ per cent. charge to its customers—a very modest charge for the administration concerned—and it makes no charge at all to the caterers. Therefore, this is a scheme which must commend itself to all parts of the House. It does not interfere with the natural and growing desire by firms and employees to get the benefits of industrial canteens and things of a similar nature.

Mr. Keith Stainton: It would be helpful and informative to know what the aggregation is per annum of the 1¼ per cent.

Mr. Sheldon: I regret that I do not have that information—I had that figure from the Luncheon Vouchers organisation—but it could easily be worked out. The 1¼ per cent. is the charge made by Luncheon Vouchers, so all one needs to find is the cost of the vouchers and takel¼ per cent. of it. I could do the sum in a few minutes, but on one's feet at the Box one is not necessarily quick at these things and the hon. Gentleman, who has a few moments, could probably do it better for himself.
The main point of resistance in the past has been that fundamentally the Treasury does not like the luncheon voucher. The argument is that if people have a canteen which a company subsidises, the subsidy comes out of profits and, since it comes out of profits, there is no tax involved. The luncheon voucher, on the other hand, the Treasury regards as an anomaly which crept in during the war and which it found itself unable to dispense with in subsequent years.
That has been the Treasury argument repeatedly used under Governments of both political parties. I find it grossly inadequate. The Government must face the question: are luncheon vouchers justified? If they are, the case for a substantial immediate increase is overwhelming. If they are not, they should be scrapped altogether and the present state of affairs ended. Soon, what will be subsidised will not be a meal any more; it will be just a mid-morning snack, and I


do not see how anyone could justify the subsidising of a snack of that kind. Either it is the sort of nourishment which people need between early morning breakfast and evening meal, or it is not. With the level of inflation which we have achieved under the present Government—and, to be fair, under previous Governments—the Treasury must now decide what it intends to do about luncheon vouchers.
Subjects of this kind come up only rarely on new Clauses; they receive an airing and then they are not heard of for a number of years. We all know the reason. Either the proposers of such new Clauses feel that it is not worth while, that the mood has not changed, or, for good reasons, very often new Clauses are not selected because it is felt that the subject has had an airing.
The need for this subject to have an airing now is all the greater because, if we are not to hear about luncheon vouchers for another three or four years, the present level of inflation will mean that their value will be derisory. It is not good enough to say that those who have the facility of a works canteen may enjoy the benefit of the meal they need in the middle of the day but others may not because their employers, often small firms of considerable importance, are unable to provide such facilities. We expect a substantial and satisfactory reply from the Minister.

Captain Walter Elliot: I hope that my hon. Friend the Minister of State will give this case sympathetic consideration and accept the Clause. I have been in many works canteens in various parts of the country, and it is my experience that one can get a good meal there at a reasonable price. I have had a good many meals in the dining rooms run by some of the big office organisations, too, and I know that a good meal can be had at a reasonable price there. Where there are not such facilities—I think particularly of office workers, many of my own constituents among them—people have what is often a poor or inadequate lunch. Certainly, one could not buy an adequate lunch for 15p. Many people do not like a big lunch, but, certainly, something to more than the value of 15p is needed.

8.15 p.m.

All hon. Members who have done any commuter travelling know that the life of the commuter is often by no means a joke. Those who work in London would, I am sure, take accommodation nearer the centre if they could find it, or if they could afford it; but we all know that they cannot, and in their daily commuting they often suffer a good deal of hardship. At a fairly short distance from the centre, say, 15 or 20 miles, the journey will commonly take one and a half hours from door to door. This means three hours of travel each day. It is very tiring. Often, it entails a cold wait on a railway station—the train may be late, they may have missed it because of the crowd, there is the occasional strike—and, for one reason or another, commuter travel can be an arduous business. Reasonable facility for a hot lunch at a reasonable price is a good thing. It keeps people healthy and satisfied.

The hon. Member for Ashton-under-Lyne (Mr. Sheldon) said that the Treasury does not like the luncheon voucher. But, as he pointed out, the Treasury has got it, and I do not suppose that it intends to do away with it. Now that prices are rising as they are, my hon. Friend must recognise that 15p is a quite inadequate sum. Perhaps 30p is barely adequate, but it is at least much better, and I sincerely hope that he will accept the Clause.

Mr. J. T. Price: I had not intended to intervene, but, having heard the very reasonable case advanced by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), I must say a few words in support of the Clause. The case for it needs no labouring. Indeed, it is so reasonable as to permit little margin for polemical argument from the Treasury Bench.
My only doubt about the matter is more on principle than on the question of luncheon vouchersper se. In my view, earnings ought to represent the true relationship of employee and employer and be in the coin of the realm, not in kind. The Truck Acts were passed many generations ago to prevent the payment of remuneration in kind instead of in cash. Be that as it may, the payment of certain small allowances for lunches, particularly to office workers employed in smaller


organisations which do not have the facility of a staff canteen, has become part of our established practice.
I am well aware that there is a commercial organisation, Luncheon Vouchers Limited, which takes a commission on the business with all the industrial catering firms which are interested. The merits of the scheme are so self-apparent as not to need laboured argument from me or anyone else. Half an hour before I came into the Chamber I went into our self-service canteen and paid 25p for a sandwich and a coffee. That is considerably more than 15p, and we are all familiar with the prices that are charged in commercial restaurants. I know that the Minister of State is overborne by more weighty questions than this, but I hope he will accept what I have to say in support of the new Clause. If the Treasury digs in its heels and says it does not like luncheon vouchers and that 15p is sufficient, it should compare the payment of that small allowance to millions of office workers and others who have no industrial canteens with the allowances on taxation, given to executives of companies who have to meet certain expenses.
Other people like myself no doubt commute from distant parts of the country and have to live in London and have to pay substantial bills for meals and accommodation even in reasonably priced hotels. Every company executive is given adequate allowances out of his taxation to pay for meals while travelling on the business of his company. Amounts of £10 a day are commonplace. Higher allowances than that are given for taxation purposes under Schedule D under the present regulations. There has been a gross abuse of expense allowances, and it is well known that very often the expense allowance is more attractive to an executive of a big company than the salary itself. Fringe benefits are very significant takenin toto.
Therefore, the Treasury advisers and those who conduct these affairs at a high level should make a comparison between what they allow on expense account allowances and this piddling allowance of 15p a day for luncheon vouchers. I said that I would not labour the point, and I hope that I am not doing so. When a decision is made it should be on grounds of equity and not on grounds of emotion or sym-

pathy. By any test the allowance of 15p has been eroded very seriously by inflation, and the Minister of State, with his colleagues in the Treasury, should at least double the amount to 30p.
I have spoken to executives of important companies on other occasions and they have told me that the subsidies paid to staff canteens are considerable. I hesitate to quote figures because I do not want to make references to individual firms. But the taxation allowed under Schedule D in respect of the subsidies by large companies which are operating successful canteen services for their employees is far in excess of 15p per head on meals supplied.
The Treasury should now unbend and unwind and cease to be so starchy and official on these matters. It does not like luncheon vouchers and the fringe benefits which are a bit of a nuisance in terms of purist economic theory. But millions of people are benefiting to a small extent from the vouchers, and the time has come for a reasonable increase in the amount. I hope the Minister of State can give an adequate reply. I shall need a great deal of convincing that all the academic ballyhoo about this is anything more than academic ballyhoo. The Treasury can condone the expense account for the business executive, yet it is niggling and petty about the 15p for the office typist, and that is wrong.

Mr. James Dempsey: For some time I have been asking the Chancellor of the Exchequer to what extent the purchasing power of the £ has been reduced over a period of years. Reply after reply has indicated that the reduction has been very substantial. It is obvious therefore that the purchasing power of the 15p on luncheon vouchers has been substantially reduced. At the very least the Minister of State should consider restoring the purchasing power of luncheon vouchers to enable workers to get the full advantage of the amount originally fixed in 1948 for the purchase of lunches. I do not see how he can resist the Clause on grounds of logic or morality.
Another aspect of the problem to which my hon. Friends have drawn attention is the subsidy which employers pay towards canteens. This has been adduced as an


argument by the Chancellor of the Exchequer for avoiding tax on profits. Certain canteens in industrial estates have been closed because the development corporation has refused to subsidise them. The employers do not have sufficiently large economic organisations to subsidise canteens and therefore they must go. The employers receive no benefit from tax because they are not subsidising a canteen and the workers, who receive luncheon vouchers, find that a substantial proportion of those vouchers is being taxed.
The Treasury should say that the employee can have a taxation allowance on luncheon vouchers up to 15p but that above that figure he will have to pay tax at 7s. 9d. in the £, approximately two-fifths, on the excess. That means that a worker who got 60p or 65p would pay about 20p in tax and spend less on food. He would be spending less on sustenance or nourishment and the money would be going back to the Chancellor of the Exchequer, despite the fact that its fundamental purpose is to renew the tissues of the body so that the worker can give production or service according to the industry or employment in which he is engaged. This is a denial of the right of any person to enjoy the fullest advantage from the allowance he gets for luncheons.

8.30 p.m.

I draw this serious anomaly to the attention of the Minister. I ask him to pause and think for a moment about Ministry employees throughout the country. I have in mind the employees of the Department of Health and Social Security, because as sure as fate when we decide to increase pensions, benefits and allowances, we always do so at the wrong time and these people have to work late under difficult conditions and in trying weather. They need nourishment, yet if they go along to get a fish supper, a cup of tea and a piece of white bread, their allowance is taxed.

That is miserable, mean and contemptible treatment of loyal people. If some of the militants in industry were to down tools and go on strike they would soon get justice, but because of the loyalty of, for example, the Ministry employees they do not take that kind of

action and they rely on the good sense, willingness and co-operation of their employer. In this respect their employer is the Chancellor of the Exchequer. It is time the Chancellor of the Exchequer reciprocated that understanding, willingness and co-operation by being fair to these employees and assuring them that when they work night after night adjusting pension books and supplementary benefit books, what they receive to spend on food and nourishment will not be taxed.

Politics or the difference between the parties do not enter into this matter. We are all human and we must all understand this problem. I am sure that the Minister has some sympathy for loyal employees who suffer such a plight. I hope we shall see evidence of that consideration and that the Minister will indicate his willingness to accept the Clause.

Mr. Alfred Morris: I agree with my hon. Friend the Member for Westhoughton (Mr. J. T. Price) that it should not be necessary to argue the case for this Clause at length. The present 15p tax-free ceiling on luncheon vouchers was agreed in 1948. If the figure of 15p was right in 1948 it is manifestly wrong today.
Many young workers, including young female workers, depend greatly on luncheon vouchers. I hope that the Minister will address himself constructively to all the points made by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who made a strong and compelling case for the Clause.
I was pleased to hear the hon. and gallant Member for Carshalton (Captain W. Elliot) indicate that the Clause has his support. Surely there are few, if any, right hon. or hon. Members in the Chamber who want to resist the Clause. It will be recalled that I had in my own name an Amendment along similar lines to the Clause. I have had representations galore from working people who argue that the value of the luncheon voucher has been depreciated again and again during the past 24 years. I appeal to the Minister to reply constructively. He will have a brief with him, but I hope that he will cast that aside and tell the House that he will accept the Clause.

Mr. Stainton: I do not know much about the intricacies of the luncheon-voucher scheme from the revenue standpoint. My understanding—I might be quite wrong—is that it is a convention which has been accepted by the Inland Revenue authorities. However, logic and fair treatment clearly indicate the increase of the 15p to at least 30p.

Hon. Members: And more.

Mr. Stainton: Thirty pence is in the Clause, and I compromise on that. The Government cannot defend a figure which has been running since 1948, albeit in perhaps a not very formal sense.
The Government now have the clear alternative of accepting the Amendment or of abolishing the scheme. They cannot have it both ways, for 15p is ludicrous and should be ruled out of court or the principle should be acquiesced in at a realistic figure. If a statistician were to get to work on this, he would probably work it out that a realistic figure would now be 90p. However, I will compromise at 30p.
We have heard about how articled clerks go off to the provinces and live it up at clients' expense and then on return to London draw their luncheon vouchers and have a beano once every two or three weeks, but I am sure that such abuses are minimal compared with the totality. I shall be very disappointed if the Government are unable to acquiesce in this reasonable Clause.

Mr. Cronin: I support the Clause, which was admirably moved by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). It is agreeable to know that the Clause is supported by hon. Members on both sides, and I will mention in particular the hon. Member for Sudbury and Woodbridge (Mr. Stainton).
None of us can contest that there is an argument from the point of view of inflation. If the luncheon voucher concession was fixed at 15p in 1948, it must be worth enormously more now. That is such a truism that it is not worth labouring. I cannot understand why the Government resist this. Is it an attempt at self-delusion, a pretence that inflation has not taken place since the war? I cannot think that the Minister of State, who is a most intelligent and kind-

hearted person, can listen to our pleas and not make strong representations to the Chancellor that the Clause should be accepted.
Apart from the obvious argument of inflation, there is the point that the concession is available mostly to secretaries, typists and clerks, people who are not organised. It would be mean for the Government to adopt a harsh and repressive attitude to people who do useful work for the community and are not organised. I cannot imagine that the Government would dare to do this to the miners, the railway men or other strongly organised bodies of workers, because the Government would soon have serious trouble on their hands. The people with whom the Government are dealing now are mostly young females who have an unsophisticated attitude to their political rights.

Mr. Stainton: They are dieting.

Mr. Cronin: Yes, but even those on a diet must eat. People who diet often buy more expensive food than those who are not on diets, so that is not an argument in favour of the Government. It is very important that secretaries, clerks and typists who do essential and valuable work should have some consideration from the Government.
From time to time on this side of the House we complain about the balance of payments situation, and from the Treasury Bench we are told how splendidly invisible exports have coped with the situation and saved us from an adverse balance of payments. But the bones and marrow of invisible exports are provided by secretaries, clerks and typists. They are the people in London—

Mr. J. T. Price: And Manchester—

Mr. Cronin: Yes, in Manchester, Birmingham and Glasgow. I would not under any circumstances try to belittle what happens in provincial cities. Work of a most industrious and energetic nature is done by secretaries, clerks and typists in the constituency of Loughborough. With characteristic modesty, I list that town last.
There has been some talk of abuses of luncheon vouchers. That cannot be a serious argument in this debate, because such abuse could occur whether the


amount was 15p or 30p. One also hears that vouchers are exchanged for goods in restaurants which serve food across the counter. A very small Amendment could put a stop to such an abuse. We ought to look at this matter in the perspective of what happens to other employees in firms of all kinds. The vast majority of non-white-collared workers have their own canteens and are provided with meals which cost very much more than 15p, and those meals are subsidised in the same way. Large firms have special canteens for secretaries, clerks and typists, and as a result they are subsidised.

Mr. Stainton: I am astounded that the hon. Member does not refer to the directors' dining room.

Mr. Cronin: I appreciate the enthusiasm shown by the hon. Member for Sudbury and Woodbridge for this cause, but I should like to develop my argument in my own way. I appreciate the impetuous feeling he has of wanting to overcome the miserable attitude of the Treasury.
Large firms have canteens for secretaries, clerks and typists, and meals there cost very much more than 15p. High executives also have their canteens and dining rooms, and directors have boardroom dining rooms, and do themselves very well indeed. I hope this meets the point made by the hon. Member for Sudbury and Woodbridge. When one goes to places like the Mirabelle, the Ambassadors or the Savoy Grill—to which I have no objection because they are places which are perfectly desirable for people who take an interest in wine and gastronomy if they can do so from their own pockets—at those expensive restaurants one sees directors and high executives eating the most sumptuous meals and having the most delicious wines.
The Minister of State might say that the cost of those meals and wines is not allowed as an expense against tax. I accept that, but the directors and high executives continue their lavish entertainment in exactly the same way as they did before my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), the then Chancellor, introduced legislation to put a stop to that. They

are now having exactly the same splendid meals; the only difference is that the tax is passed on to the consumer. It is as simple as that.

8.45 p.m.

We have a situation in which directors and executives eat to the highest gastronomic standards; secretaries, clerks and typists in large firms eat meals that are much more expensive than 15p per person; and workers in industry generally also eat meals which cost much more than 15p a head in canteens that are heavily subsidised.

It is an intolerable injustice that the Government should select a relatively small group of the population—a group consisting of secretaries, typists and clerks—which is doing excellent work. Why should such people be selected for this gross injustice? Hon. Members on both sides of the House feel indignant about this. No doubt the Minister of State will rise to much higher ministerial ranks. If he has real political sense he will realise that this is an important issue and that it will make a big difference to him if he can represent to the Chancellor the injustice that is being suffered and persuad him to take steps to put it right.

Mr. Ray Carter: I apologise for coming into the Chamber rather late and missing the speech of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). I may repeat some of the things he has already said.
When we began our deliberations on the Floor of the House I moved a number of Amendments, one of which provided that VAT should not be imposed on catering. I argued in Committee upstairs that we should not impose any form of taxation on food of any kind, however the food was prepared, dispensed or sold, but VAT will be imposed on catering. Therefore, in considering the question of luncheon vouchers we must remember the VAT background, which will have a considerable effect upon prices.
Not only restaurants will be affected; catering establishments within firms will be included. The luncheon voucher system operates in many of our industrial and commercial canteens. One can either exchange the voucher in the canteen or take it outside to a restaurant.
VAT will be imposed on a whole range of possible substitutes, especially confectionery. It will also be imposed on vending machines which dispense meals. No one will be able to escape the effects of VAT when eating at lunch-time or in the evening, or even in the morning.
My hon. Friend the Member for Lough-borough (Mr. Cronin) spoke about workers in city centres. They are not the only people who benefit from luncheon vouchers. Millions of industrial workers use luncheon vouchers and I venture to suggest that the global total in the industrial sector is greater than in the commercial sector.

Mr. Raymond Gower: The hon. Gentleman is making a great point about VAT on catering, but does he recall that his own Government rejected Amendments from the then Opposition to exempt catering from selective employment tax? I do not see why the hon. Gentleman should make such a big point of the matter, when it was done by his own Government.

Mr. Carter: I take the point, as I must, but let us take that argument to its logical conclusion. Conservative Members who opposed SET, which had an inflationary effect on the price of food, must surely oppose VAT. I therefore expect the hon. Gentleman to go through the same Lobby as I do tonight. Knowing him as I do, I am sure he will be consistent and do so for a variety of reasons. He is concerned about the way in which VAT will affect the price of food and the way in which inflation is affecting many aspects of our lives, particularly the cost of food. The value of the luncheon voucher pales into insignificance compared with the rate of inflation over the past two or three years, quite apart from the fact that it has not been varied since 1948. It is at an appalling level.
I have a further point which concerns the Government's attitude to food in general. We tried to extract from them in Committee a pledge that they would use the veto in support of the zero-rating of food. Obviously, I should be ruled out of order if I tried to widen the scope of this debate to deal with the zero-rating of food. What worries me is the Government's total attitude towards food.

They told us in Committee that VAT is a broad-based tax of a comprehensive nature. Every argument they have deployed, on whatever subject, has been to propel that philosophy forward into every avenue and I suspect that we shall have further evidence of it from the Minister tonight. He is bound to follow the line taken in Committee. Although he promised to look again at the question of luncheon vouchers, as with confectionery and a variety of other things, there was never any assurance of a satisfactory reply. I ask him to bear in mind, however, that any increase in the price of lunches for workers will have a devastating effect on inflation, because they will naturally try to make good any loss through a wage claim. Therefore, it would be a disinflationary step to accept the new Clause and the principles we have argued and increase the value of the luncheon voucher.

The Minister of State, Treasury (Mr. John Nott): As the hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, the practice of not taxing luncheon vouchers up to a set value has existed since 1948. It arose because of the difficulties in obtaining meals for employees in the immediate post-war period. Because of those difficulties, employers made special arrangements with nearby restaurants and cafes to provide meals for their staff in exchange for luncheon vouchers.
I want to trace the historical background, because it will help the House to understand the present position. The present extra-statutory concession—because in law the cash value of a meal voucher is a taxable emolument of the employee who receives it—was announced formally in Parliament on 20th January, 1959, by then then Chancellor of the Exchequer, Mr. Heathcoat Amory, although the practice of issuing tax-free vouchers had been going on since three years after the end of the war. We are still carrying on under that concession today. The conditions attached to the concession were, first, that the vouchers should be non-transferable and used for meals only; secondly, that when any restriction is placed on their issue to employees they must be available to lower-paid staff; and, thirdly, that the value of the voucher issued to an employee must not exceed 15p for each full working day.
The concession was seen then as justified on the ground that the provision of luncheon vouchers did no more than put employees of concerns which did not have canteen facilities in the same position as workers who had a subsidised canteen. The employee who obtains a cheap meal in a canteen is not liable to tax on what he saves compared with what he would pay in a restaurant. It was argued at the time that the luncheon voucher was the equivalent of an employer's subsidy to a canteen meal. It was not intended to cover the cost of a full meal. It was never the intention at that time, and I do not think it is the intention of hon. Members at present, that the luncheon voucher should be enough to cover the full cost of a restaurant meal.
When luncheon vouchers were first issued, three shillings a day was undoubtedly on the generous side compared with the normal canteen subsidy on each meal served. But 15p is now a defensible estimate of the average canteen subsidy. The subsidies given by outside employers vary widely, but the Civil Service subsidy and subsidies in works canteens are close enough to 15p to enable the present value of the untaxed voucher to be defended on the ground of comparability.
The latest survey which has been conducted by an outside body on the average cost of a subsidy in a works canteen was carried out by the Industrial Society in 1971. It was a survey of canteen prices, costs and subsidies. I believe that the survey is available in the Library. If it is not, I will ensure that it is available in the Library. It indicates that the average subsidy in works canteens is 15p.The hon. Member for Westhoughton (Mr. J. T. Price) asked me about comparisons. I think that that is the true comparison which must be made. This is what we are providing for—a subsidy for an outside meal equivalent to that generally available to the employee who benefits from canteen facilities.

Captain W. Elliot: A works canteen, for example, or even a dining room in a big office block does not have the overheads of the sort of restaurant to which a secretary in the City of London goes for a meal.

9.0 p.m.

Mr. Nott: I believe that in the figures which I quoted from the Industrial

Society Survey overheads have been taken into account in arriving at what it states is approximately 15p a day subsidy. If my hon. Friend is saying that we must compare like with like, certainly I have done so as far as possible although overheads will vary widely from one place to another.
Nevertheless it is right that this point should be debated in the House. As the hon. Member for Ashton-under-Lyne said, it is a matter of considerable importance. But I ought to stress that there is nothing to prevent an employer issuing luncheon vouchers to his employees for a value greater than 15p a day. But above 15p a day they will be taxable. All that we are discussing here is the untaxed element at present available.
The Clause sets out to double the value of the exemption currently given by concession to recipients of luncheon vouchers, and it is intended that that should be given the force of statute law. However the Clause could be interpreted as giving an employee an entitlement to luncheon vouchers as opposed to providing for the tax exemption, within limits, of vouchers received. I do not know whether it is the intention that it should be compulsory on all employers to issue luncheon vouchers up to 30p a day. As drafted, that is what the Clause does.
I cannot confirm that the figure of 19 million vouchers in issue is correct. But the present cost to the Revenue of issuing luncheon vouchers is about £6 million—

Mr. Sheldon: If I said 19 million vouchers, it was a slip of the tongue. I meant £19 million worth.

Mr. Nott: I was about to say that possibly what the hon. Gentleman meant was a turnover of £19 million, which would work out at about the £6 million figure that I have given.
I hope that I shall not be accused of wishing to starve all those attractive typists in Loughborough, the City of London, Manchester and elsewhere. We are talking about the tax element of the vouchers, and I have listened with interest and some sympathy to what hon. Members have said.

Mr. J. T. Price: The hon. Gentleman is being extremely urbane about this because he is on a bad wicket. He knows that we know the sort of wicket that he


is on. He referred to this practice which goes against all the canons of taxation laid down in the tablets of the Treasury. He says that it is taxable and that it has never been embodied in Statute legislation. However, when Derick Heathcoat Amory made his announcement in 1959, as Chancellor of the Exchequer he was well aware that the 15p had been fixed in relation to what was then the subsidy on an industrial canteen meal. If he knew then, why should the Treasury seek to change the direction of the argument saying that it does not accept there is any difference today since the Industrial Society Survey has made an investigation and says that it is about the same? Derick Heathcoat Amory knew this in 1959. If he thought that 15p was good enough then, even 30p today is not adequate to maintain the standard.

Mr. Nott: A great number of factors may have changed. The average cost of subsidy may have changed since 1959. Nevertheless I do not deny that the cost of meals has risen considerably since 1959.
Of course I cannot give any commitment. The hon. Member for Lough-borough (Mr. Cronin) made a number of kind remarks. But I am sure that I should not stay in my present post for long if I made up my mind suddenly to concede his appeal immediately. That would not be the best way for me to proceed in the direction he has indicated.
I will bring to the attention of my right hon. Friend the appeals that have been made in the debate. I recognise that the cost of meals has increased since this extra-statutory concession was made. We will take all these matters into consideration when we look at the matter afresh. In this regard the present arrangements are extra-statutory. Assuming we were not to embody the arrangements in statutory form, they could in principle be varied at any time.

Mr. Sheldon: With the leave of the House, I should like to reply briefly to the Minister of State.
My hon. Friend the Member for Westhoughton (Mr. J. T. Price) was right that the 15p could never have been the element of the subsidy of the cost of canteens in 1959. That was a patent nonsense at that time. It is obvious in retrospect that the Treasury has managed

to find some justification for a figure of 15p. It is interesting and convenient to note that the coincidence of the figures which have been adduced is due to the level of inflation having continued at such a pace that the level of subsidy now happens to be equal to it. That was an obvious nonsense in 1959 and an even greater nonsense in 1948. I suppose that 10 years from now, if the present Government continued in power and 15p were to be reduced in value to 5p, they would find that it was the equivalent of the stamp to send one document from one place to another.
That is not the point of the debate. The debate is about giving assistance to people who have no opportunity of taking meals in the middle of the day to make sure they are not penalised compared with those who have the benefit of a works or factory canteen. We agree and accept that the best way to get a meal in the middle of the day for those who are at work is to do so in an industrial canteen. The luncheon voucher people accept and fully understand that their purpose is to provide meals for people who do not have those facilities.
The point which impresses me is the enormous increase in the number of luncheon vouchers in cities and towns outside London where previously they have been inadequately developed. There has been a big increase in the numbers taking advantage of this scheme.
The Minister mentioned extra-statutory concessions. It is unsatisfactory that we should have a decision that is not enshrined in a Finance Bill or other legislation that comes before the House and is capable of being scrutinised and investigated properly. This decision must be the basis of legislation so that we can make changes as regularly and frequently as we do ordinarily in Finance Bills.
The hon. and gallant Member for Carshalton (Captain W. Elliot) grasped the whole point about overheads which the Minister failed properly to tackle. It is not enough to say that an industrial canteen provides some level of subsidy. The overheads in an industrial canteen, which forms part of factory premises, are not charged to the workers. The little restaurant round the corner has a level of overheads incomparably greater than that of any factory. It is rated and sited differently. It has waitresses who work


at different levels of pay because of the problems of running a restaurant compared with the running of a canteen. Its clientele is less assured, so it has extra overheads which are unknown to the factory canteen. But even if the Minister is right in equating the level of industrial subsidy to the level of the luncheon voucher, he is wrong in failing to take into account the way in which a restaurant operates. It is different from that of any industrial organisation, which has a captive clientele.
My hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) made the important point about the need for young people to have an opportunity for a midday meal, which is

the only one they have between the time they leave home in the morning and their evening meal.

The Minister's reply is an afterthought by the Treasury in an attempt to defend the indefensible. An argument that we have never heard before is now being trotted out. What is important is how we provide an equivalent service to those who do not have the benefit of an industrial canteen. We say that the new Clause is the way to do it, and we shall vote for it.

Question put, That the Clause be read a Second time: —

The House divided: Ayes 192, Noes 213.

Division No. 282.]
AYES
[9.11 p.m.


Abse, Leo
Ellis, Tom
Lewis, Ron (Carlisle)


Albu, Austen
Evans, Fred
Lipton, Marcus


Allaun, Frank (Salford, E.)
Ewing, Henry
Lomas, Kenneth


Allen, Scholefield
Faulds, Andrew
Lyon, Alexander W. (York)


Archer, Peter (Rowley Regis)
Fitch, Alan (Wigan)
McElhone, Frank


Ashton, Joe
Fletcher, Raymond (Ilkeston)
McGuire, Michael


Atkinson, Norman
Fletcher, Ted (Darlington)
Mackenzie, Gregor


Bagier, Gordon A. T.
Foley, Maurice
Mackintosh, John P.


Barnes, Michael
Foot, Michael
Maclennan, Robert


Barnett, Guy (Greenwich)
Ford, Ben
McMillan, Tom (Glasgow, C.)


Barnett, Joel (Heywood and Royton)
Fraser, John (Norwood)
Marsden, F.


Baxter, William
Freeson, Reginald
Marshall, Dr. Edmund


Benn, Rt. Hn. Anthony Wedgwood
Galpern, Sir Myer
Mason, Rt. Hn. Roy


Bennett, James (Glasgow, Bridgeton)
Garrett, W. E.
Meacher, Michael


Blenkinsop, Arthur
Gilbert, Dr. John
Mellish, Rt. Hn. Robert


Booth, Albert
Ginsburg, David (Dewsbury)
Mendelson, John


Bottomley, Rt. Hn. Arthur
Golding, John
Mikardo, Ian


Boyden, James (Bishop Auckland)
Grant, George (Morpeth)
Millan, Bruce


Broughton, Sir Alfred
Grant, John D. (Islington, E.)
Miller, Dr. M. S.


Brown, Bob (N'c'tle-upon-Tyne,W.)
Griffiths, Will (Exchange)
Morgan, Elystan (Cardiganshire)


Brown, Hugh D. (G'gow, Provan)
Hamilton, James (Bothwell)
Morris, Alfred (Wythenshawe)


Brown, Ronald (Shoreditch &amp; F'bury)
Hamilton, William (Fife, W.)
Morris, Charles R. (Openshaw)


Buchan, Norman
Hamling, William
Morris, Rt. Hn. John (Aberavon)


Campbell, I. (Dunbartonshire, W.)
Hannan, William (G'gow, Maryhill)
Moyle, Roland


Cant, R. B.
Harrison, Walter (Wakefield)
Mulley, Rt. Hn. Frederick


Carter, Ray (Birmingh'm, Northfield)
Hart, Rt. Hn. Judith
O'Halloran, Michael


Carter-Jones, Lewis (Eccles)
Hattersley, Roy
Oram, Bert


Castle, Rt. Hn. Barbara
Healey, Rt. Hn. Denis
Oswald, Thomas


Clark, David (Colne Valley)
Horam, John
Palmer, Arthur


Cocks, Michael (Bristol, S.)
Houghton, Rt. Hn. Douglas
Pardoe, John


Concannon, J. D.
Hughes, Robert (Aberdeen, N.)
Parker, John (Dagenham)


Conlan, Bernard
Hunter, Adam
Pavitt, Laurie


Corbet, Mrs. Freda
Irvine,Rt.Hn.SirArthur (Edge Hill)
Pentland, Norman


Cox, Thomas (Wandsworth, C.)
Janner, Greville
Prentice, Rt. Hn. Reg.


Cronin, John
Jeger, Mrs. Lena
Prescott, John


Crossman, Rt. Hn. Richard
John, Brynmor
Price, J. T. (Westhoughton)


Cunningham, G. (Islington, S.W.)
Johnson, James (K'ston-on-Hull, W.)
Probert, Arthur


Dalyell, Tam
Johnson, Walter (Derby, S.)
Rankin, John


Davidson, Arthur
Johnston, Russell (Inverness)
Rees, Merlyn (Leeds, S.)


Davies, Denzil (Llanelly)
Jones, Barry (Flint, E.)
Rhodes, Geoffrey


Davies, Ifor (Gower)
Jones, Dan (Burnley)
Roberts, Albert (Normanton)


Davis, Clinton (Hackney, C.)
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Roberts,Rt.Hn.Goronwy (Caernarvon)


Davis, Terry (Bromsgrove)
Jones, Gwynoro (Carmarthen)
Roper, John


Deakins, Eric
Jones, T. Alec (Rhondda, W.)
Rose, Paul B.


de Freitas, Rt. Hn. Sir Geoffrey
Judd, Frank
Ross, Rt. Hn. William (Kilmarnock)


Dempsey, James
Kaufman, Gerald
Sheldon, Robert (Ashton-under-Lyne)


Doig, Peter
Lambie, David
Shore, Rt. Hn. Peter (Stepney)


Dormand, J. D.
Lamborn, Harry
Short,Rt.Hn.Edward N'c'tle-u-Tyne)


Driberg, Tom
Lathham, Arthur
Silkin, Hn. S. C. (Dulwich)


Duffy, A. E. P.
Lawson, George
Silverman, Julius


Dunnett, Jack
Leadbitter, Ted
Skinner, Dennis


Eadie, Alex
Lee, Rt. Hn. Frederick
Small, William


Edelman, Maurice
Lestor, Miss Joan
Spearing, Nigel


Edwards, Robert (Bilston)
Lever, Rt. Hn. Harold
Spriggs, Leslie




Stallard, A. W.
Tuck, Raphael
Willey, Rt. Hn. Frederick


Stewart, Donald (Western Isles)
Urwin, T. W.
Williams, Mrs. Shirley (Hitchin)


Stoddart, David (Swindon)
Varley, Eric G.
Williams, W. T. (Warrington)


Stonehouse, Rt. Hn. John
Wainwright, Edwin
Wilson, Alexander (Hamilton)


Strang, Gavin
Walker, Harold (Doncaster)
Wilson, Rt.Hn. Harold (Huyton)


Summerskill, Hn. Dr. Shirley
Wallace, George
Wilson, William (Coventry, S.)


Thomas,Rt.Hn.George (Cardiff,W.)
Watkins, David
Woof, Robert


Thomas, Jeffrey (Abertillery)
Wellbeloved, James



Thomson, Rt. Hn. G. (Dundee, E.)
Wells, William (Walsall, N.)
TELLERS FOR THE AYES


Tinn, James
White, James (Glasgow, Pollok)
Mr. Joseph Harper and


Tomney, Frank
Whitehead, Philip
Mr Donald Coleman


Torney, Tom
Whitlock, William





NOES


Adley, Robert
Goodhew, Victor
Nott, John


Astor, John
Gorst, John
Oppenheim, Mrs. Sally


Atkins, Humphrey
Gower, Raymond
Osborn, John


Awdry, Daniel
Grant, Anthony (Harrow, C.)
Owen, Idris (Stockport, N.)


Baker, Kenneth (St. Marylebone)
Gray, Hamish
Page, Rt. Hn. Graham (Crosby)


Barber, Rt. Hn. Anthony
Green, Alan
Page, John (Harrow, W.)


Batsford, Brian
Grieve, Percy
Parkinson, Cecil


Beamish, Col. Sir Tufton
Griffiths, Eldon (Bury St. Edmunds)
Peel, John


Bell, Ronald
Grylls, Michael
Percival, Ian


Bennett, Sir Frederic (Torquay)
Gummer, J. Selwyn
Pink, R. Bonner


Benyon, W.
Gurden, Harold
Powell, Rt. Hn. J. Enoch


Berry, Hn. Anthony
Hall, Miss Joan (Keighley)
Price, David (Eastleigh)


Biggs-Davison, John
Hall-Davis, A. G. F.
Prior, Rt. Hn. J. M. L.


Blaker, Peter
Hamilton, Michael (Salisbury)
Proudfoot, Wilfred


Body, Richard
Harrison, Col. Sir Harwood (Eye)
Pym, Rt. Hn. Francis


Boscawen, Robert
Havers, Michael
Quennell, Miss J. M.


Bossom, Sir Clive
Hawkins, Paul
Ramsden, Rt. Hn. James


Bowden, Andrew
Hicks, Robert
Rawlinson, Rt. Hn. Sir Peter


Bray, Ronald
Higgins, Terence L.
Redmond, Robert


Brinton, Sir Tatton
Hiley, Joseph
Reed, Laurance (Bolton, E.)


Brown, Sir Edward (Bath)
Hill, John E. B. (Norfolk, S.)
Rees, Peter (Dover)


Bryan, Sir Paul
Hill, James (Southampton, Test)
Rees-Davies, W. R.


Buck, Antony
Holland, Philip
Renton, Rt. Hn. Sir David


Bullus, Sir Eric
Hordern, Peter
Rhys Williams, Sir Brandon


Butler, Adam (Bosworth)
Hornby, Richard
Ridsdale, Julian


Campbell, Rt.Hn.G.(Moray&amp;Nairn)
Hornsby-Smith,Rt.Hn.Dame Patricia
Roberts, Michael (Cardiff, N.)


Carr, Rt. Hn. Robert
Howell, Ralph (Norfolk, N.)
Roberts, Wyn (Conway)


Chapman, Sydney
Hunt, John
Rossi, Hugh (Hornsey)


Chataway, Rt. Hn. Christopher
Iremonger, T. L.
Rost, Peter


Churchill, W. S.
James, David
Russell, Sir Ronald


Clark, William (Surrey, E.)
Jenkin, Patrick (Woodford)
Scott-Hopkins, James


Clarke, Kenneth (Rushciffe)
Jessel, Toby
Sharples, Richard


Clegg, Walter
Johnson Smith, G. (E. Grinstead)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Cooks, Robert
Jopling, Michael
Shelton, William (Clapham)


Corfield, Rt. Hn. Sir Frederick
Kellett-Bowman, Mrs. Elaine
Simeons, Charles


Cormack, Patrick
Kershaw, Anthony
Sinclair, Sir George


Costain, A. P.
King, Evelyn (Dorset, S.)
Skeet, T. H. H.


Critchley, Julian
Kinsey, J. R.
Smith, Dudley (W'wick &amp; L'mington)


Crouch David
Knox, David
Soref, Harold


Crowder, F. P.
Lamont, Norman
Speed, Keith


d'Avigdor-Goldsmid.Maj.-Gen.James
Lane, David
Spence, John


Dean, Paul
Le Merchant, Spencer
Sproat, Iain


Deedes, Rt. Hn. W. F.
Longden, Gilbert
Stanbrook, Ivor


Digby, Simon Wingfield
Luce. R. N.
Stewart-Smith, Geoffrey (Belper)


Dixon, Piers
McAdden, Sir Stephen
Stoddart-Scott, Col. Sir M.


Dodds-Parker, Douglas
MacArthur, Ian
Stokes, John


Dykes, Hugh
McCrindle, R. A.
Stuttaford, Dr. Tom


Elliott, R. W. (N'c'tle-upon-Tyne.N.)
McLaren, Martin
Taylor,Edward M.(G'gow.Cathcart)


Emery, Peter
Macmillan,Rt.Hn.Maurice (Farnham)
Taylor, Frank (Moss Side)


Eyre, Reginald
McNair-Wilson, Michael
Taylor, Robert (Croydon, N.W.)


Farr, John
McNair-Wilson, Patrick (NewForest)
Tebbit, Norman


Fell, Anthony
Madel, David
Temple, John M.


Fenner, Mrs. Peggy
Marten, Neil
Thomas, John Stradling (Monmouth)


Fidler, Michael
Mather, Carol
Thomas, Rt. Hn. Peter (Hendon, S.)


Finsberg, Geoffrey (Hampstead)
Maude, Angus
Tilney, John


Fisher, Nigel (Surbiton)
Maxwell-Hyslop, R. J.
Trafford, Dr. Anthony


Fletcher-Cooke, Charles
Mitchell,Lt.-Col.C.(Aberdeenshire,W)
Trew, Peter


Fookes, Miss Janet
Mitchell, David (Basingstoke)
Turton, Rt. Hn. Sir Robin


Foster, Sir John
Moate, Roger
Vaughan, Dr. Gerard


Fox, Marcus
Money, Ernle
Vickers, Dame Joan


Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)
Monks, Mrs. Connie
Walder, David (Clitheroe)


Fry, Peter
Monro, Hector
Walker, Rt. Hn. Peter (Worcester)


Gardner, Edward
Morgan, Geraint (Denbigh)
Walker-Smith, Rt. Hn. Sir Derek


Gibson-Watt, David
Morgan-Giles, Rear-Adm.
Ward, Dame Irene


Gilmour, Ian (Norfolk, C.)
Morrison, Charles
Warren, Kenneth


Gilmour, Sir John (Fife, E.)
Mudd, David
Weatherill, Bernard


Glyn, Dr. Alan
Neave, Airey
Wells, John (Maidstone)


Godber, Rt. Hn. J. B.
Noble, Rt. Hn. Michael
Wiggin, Jerry


Goodhart, Philip
Normanton, Tom
Wilkinson, John







Winterton, Nicholas
Woodhouse, Hn. Christopher
TELLERS FOR THE NOES


Wolrige-Gordon, Patrick
Woodnutt, Mark
Mr. Tim Fortescue and


Wood. Rt. Hn. Richard
Worsley, Marcus
Mr. Oscar Murton.

Question accordingly negatived.

New Clause 9

TAX RELIEF FOR DISABLED PERSONS IN NEED OF CONSTANT ATTENDANCE

(1) Subject to subsection (2) below, if a claimant proves—
(a) that he is a married man who for the year of assessment has his wife living with him. and that one or both of them was for the whole or part of the year a disabled person as defined in subsection (2) of this section; or
(b) that, not being such a married man, he was for the whole or part of the year a disabled person as defined in subsection (2) of this section; or
(c) that he is a person who throughout the year has to provide for the requirements of some other person, being ordinarily resident with him, who is a disabled person as defined in subsection (2) of this section,
he shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate of £100:
Provided that relief under this section shall be alternative to relief under either sections 214 or 215 or 216 or 217 or 218 of the Income Tax Acts 1952, as amended.

(2) In this section "disabled person" means a person who is aged 70 or over or requires constant attendance as a result of loss of mental or physical faculty.—[Mr. Alfred Morris.]

Brought up, and read the First time.

Mr. Alfred Morris: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker (Miss Harvie Anderson): With new Clause 9 it would be convenient for the House to discuss new Clause 21.

Relief for mentally or physically infirm persons

(1) Subject to subsections (2), (3) and (4) below, any individual who is certified by a registered medical practitioner as being in need of care and attention, by reason of being incapacitated by mental or physical infirmity, and who for the year of assessment maintains or employs any person full time as an in the capacity of housekeeper, or maintains or employers any person full time as an attendant, shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to income tax at the standard rate on £100:

Provided that for the purpose of this subsection the condition of employing such an attendant full time shall be satisfied if the

hours of actual attendance in that employment are not less than an aggregate of 25 hours in each week, or where more than one attendant is employed the aggregate total hours of such actual attendance is not less than an average of 25 hours in each week.

(2) A married man who is entitled for the year of assessment to the higher (married persons) relief under section 8(i) above shall not be entitled to relief under this section unless throughout that year of assessment, his wife was totally incapacitated by physical or mental infirmity.

(3) No relief shall be allowed under this section to a claimant who is entitled to relief under sections 12 or 17 above unless he relinquishes his claim thereto.

(4) Where the claim under subsection (1) above is made in respect of a person maintained by the claimant no relief shall be allowed under this secion unless the claimant proves that neither he nor any other individual is entitled to relief in respect of the same person under any other provision of Part 1 of the Income and Corporation Taxes Act 1970, or if any other individual is so entitled that the other individual has relinquished his claims thereto.

(5) The enactments relating to income tax and in particular Part I of the Income and Corporation Taxes Act, 1970, shall have effect as if this section was contained in the said Part 1 immediately after section 18, and section 28(1)(c) below (relating to the allowance of personal reliefs from total income for surtax) shall include a reference to this section and the relief under this section.

(6) This section shall not be deemed to have required any change in the amounts deducted or repaid under section 204 of the Income and Corporation Taxes Act 1970 (Pay-as-you- Earn), before the 31st day of March 1972

and new Clause 22,

Relief in respect of dependant relatives

(1) This section applies
(a) to any individual who is not entitled for the year of assessment to the higher (married persons) relief under section 8(1) Income and Corporation Taxes Act 1970 and
(b) to any married man who is entitled for the year of assessment to the higher relief aforesaid but whose wife was throughout that year totally incapacitated by physical or mental infirmity.

(2) Subject to subsections (3) and (4) below, if the claimant, being a person to whom this section applies, proves in the case of a year of assessment that he is entitled to relief under section 16 below in respect of a dependent relative resident with him who is certified by a registered medical practitioner as being in need of care and attention, by reason of being incapacitated by mental or physical infirmity, he shall be entitled to a deduction from the amount of income tax with which


he is chargeable equal to income tax at the standard rate on £100.

(3) Where more than one individual is entitled to relief under this section in connection with the same dependent relative, the £100 mentioned in subsection (2) above shall be apportioned between them in such proportions as may be agreed between them or in default of agreement in accordance with such apportionment as may be adopted in relation to that dependent relative under section 16(2) below.

(4) No relief shall be given under this section in respect of any dependent relative who has been allowed relief under section (18A) below for the same year of assessment unless that dependent relative has relinquished his claim.

(5) The enactments relating to income tax and in particular Part I of the Income and Corporation Takes Act, 1970, shall have effect as if this section was contained in the said Part I immediately after section 14, and section 28(i)(c) below (relating to the allowance of personal reliefs from total income for surtax) shall include a reference to this section and the tax relief under this section.

(6) This section shall not be deemed to have required any change in the amounts deducted or repaid under section 204 of the Income and Corporation Taxes Act, 1970 (Pay-as-you-Earn), before 31st of March, 1972'.

Mr. Morris: This is an extremely important amendment to the Bill. Its purpose is to give a small measure of financial relief to many hard-pressed individuals and families who are striken by disablement. We are not saying "Give them more" but "Take less from them".
The cost of accepting the new Clause would be trivial compared with other concessions already made by the Government. Most of the Government's concessions have been made to the fit and fortunate. Here we are seeking to help those who are disadvantaged by age or severe disablement. It is often not fully understood that disablement involves a higher cost of living. The extra costs apply even to those whose disabilities are not so severe as to qualify them for the constant attendance allowance first proposed by the Labour Government.
That disablement involves extra costs is fully accepted in Government advice to local authorities. There was a circular from four Departments about the implementation of the Chronically Sick and Disabled Persons Act in 1970.That circular asked local authorities to take into account the extra costs of disablement for the disabled individual and his family. We are merely asking here that the Gov-

ernment should practise what they preach to local authorities.
The extra costs argument is also fully accepted, outside the Government, by right hon. and hon. Members on both sides of the House. The argument has been made very strongly by, among others, my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), my hon. Friend the Member for Eccles (Mr. Carter-Jones), the hon. Member for Newbury (Mr. Astor) and the hon. Member for Banbury (Mr. Marten).
Other hon. Members will want to give examples of the extra costs incurred by the disabled. I shall give only one, and this concerns the footwear of heavily handicapped children. Spastic children, for example, often have to drag their feet along the ground because of their disabilities. It makes little difference how tough the footwear might be. The result is always the same. Not only do the soles of their shoes wear out at incredible speed but, even worse, the toe caps and uppers are also ruined. This makes it impossible for the shoes to be repaired. I know of some families with spastic children who have to spend £1 a week on shoes alone, often out of very modest incomes.

Mr. Speaker: Order. The hon. Member's name is not among those sponsoring the new Clause. It will be necessary for one of his hon. Friends technically to move it, after which the hon. Member may resume his speech.

Dr. Gilbert: I beg to move, That the Clause be read a Second time.

Mr. Morris: I am grateful for your guidance, Mr. Speaker.
I was saying that I know of some families with spastic children who have to spend £1 a week on shoes alone, often out of very modest incomes. With the soaring cost of living, these families often find life difficult enough. The extra 10 per cent, for value added tax on children's shoes will make their problems even more daunting. Acceptance by the Government of this Clause would make the problems of such families a little easier.
A recent survey conducted into the shoe problems of spastic children revealed that 27½ per cent. of the 1,514 children involved were what are called shoe wreckers. Other investigations show that


handicapped children can wear out a pair of shoes completely in two to six weeks.
It may be that my hon. Friends will argue that there are imperfections in the drafting of the Clause. They may feel that subsection (2) could have been more felicitously worded. My hon. Friends may have those reservations, but I note that the Minister of State applauded the suggestion.

Mr. Nott: I did not say anything.

Mr. Morris: New Clause 9 was origin ally drafted by the late Iain Macleod and was supported—

Mr. Nott: I should like to make it absolutely clear that I did not utter a word.

Mr. Morris: My impression was that the hon. Gentleman was welcoming the suggestion that my hon. Friends may criticise the drafting of new Clause 9. I referred to my hon. Friends because the Clause was first drafted by the late Iain Macleod. As hon. Members will recall, he together with the hon. Member for Wokingham (Mr. van Straubenzee) proposed a new Clause in these terms when the 1968 Finance Bill was before the House. Anyone who wishes to check the point can refer to the Supplement to Votes 1967–68, Vol. 9.
I think that Iain Macleod was right to put it to the House that there are extra costs for disabled families. I hope that the hon. Member for Wokingham in particular will support the Clause in the Lobby tonight. I hope that other hon. Members on the Government side will support it, if only as a tribute to the late Iain Macleod. I hope they will say in government what they were prepared to support in opposition.
Many of my hon. Friends will want to speak from close experience of the problems of disabled families, and I hope that the Minister of State will respond constructively to their arguments. There is no reason why new Clause 9 should not be accepted. We are asking for only a modest measure of relief for some of the most hard-pressed individuals and families in the land, and I ask the Minister of State to respond accordingly.

9.30 p.m.

Mr. David Price: I listened with interest to the hon. Member for

Manchester, Wythenshawe (Mr. Alfred Morris), but I think that technically, he goes beyond the scope of new Clause 9 when he talks about shoes for spastic children, because the Clause defines a disabled person as someone aged 70 or over. This is one of my minor quarrels with the Clause.

Mr. Alfred Morris: No. The words are:
In this section 'disabled person' means a person who is aged 70 or over or requires constant attendance as a result of loss of mental or physical faculty".

Mr. Price: I accept that. I was about to say that I do not make a point of it because I see these new Clauses as an opportunity to talk about the whole range of tax allowances for the disabled, and it is to this that I wish now to turn the attention of the House. At the outset, perhaps I should declare my own modest vested interest in that I am a member of a disabled family. In these days when, it seems, we must declare all our interests,. I declare that one, painful though it is.
I am interested in the new Clauses, but I am interested above all in the spirit behind them, which I regard as more important than the actual wording. They are an attempt to ameliorate some of the sore spots of our society but they relate to some, and only some, of those who suffer from severe physical or mental disability. This is not a new problem though the scale of it is relatively new, certainly within the lifetime of most of us here present. In a curious way it is, perhaps, a measure of our progress in social and medical matters. But that is no reason why we should not address ourselves to the problem with both determination and compassion. I know that the whole House will agree that one measure of the strength and health of any society is the extent to which it makes provision for its handicapped brethren.
I need not go over the figures—I am sure that they are well known to all hon. Members present—but the fact that there are over 1 million people here involved out of a society of 56 million gives a measure of what we have to deal with. Again, I am sure that the House will agree that the long-term answer to all these problems is a combination of cash and care. The care side is beyond the


scope of these new Clauses. Nevertheless, we must agree that the biggest handicap flowing from disability is one's inability to lead a normal life, so that we must look at any tax provision from the standpoint of how far it assists the disabled person to take his or her part in the normality of the community.
Obviously, it is to the cash side of that proposition that we must direct attention tonight—we should be out of order were we to do otherwise—and the cash side has two aspects. There is the social benefit side, which is beyond the scope of the new Clauses. Only the tax allowance side is our concern here. But I do not believe that we can look at what would be the right provision on the tax allowance side without directing attention to our objective on the cash provision side. Here I declare my interest. As hon. Members know, I believe that the right thing is a national disability income. This is the key to the whole problem. Until we get that right, what we do in income tax provision is minor.
Nevertheless it is important, if we accept the strategy of moving towards a national disability income, that what we do in income tax allowances should support that strategy. Although my right hon. Friend the Secretary of State for Social Services has gone two stages down the road—the first, the attendance allowance, rather tightly defined; the next to come in the autumn, taking two years to bring in, I understand, and a little more generous in definition—these steps take us only a modest way towards providing that disability income which most hon. Members present regard as the right strategy for the nation to pursue. Therefore we must examine the priorities of income tax allowances. I believe that the priority as of now should be to deal with those disabled people who are beyond the scope of the constant attendance allowance, either mark I or mark II, and that means above all those who manage to get to work. That should be the key priority at the moment.
The correct way to approach tax allowances would be as of now to assist those disabled people going to work with the extra expense that is incurred for them because of their disability in getting there. I am sure that will commend itself to both sides of the House. With respect

to the very respectable proposals tabled by the Opposition, I believe that to be the most important priority at the moment. Whether that requires a new Clause and Amendment to the Finance Bill or whether it could be done administratively by my right hon. Friend the Chancellor of the Exchequer working with the Inland Revenue is something that I would like to have explained by my hon. Friend the Minister of State. A great deal could surely be done administratively.
On the wider issue I would hope that my right hon. Friend the Chancellor of the Exchequer would undertake to review the whole of the tax allowances offered to disabled people and also to those who look after disabled people, in conjunction with the Department of Health and Social Security, so that both a straight cash provision and tax allowance would be working in the same direction. There is a very simple precept by which my right hon. Friends could approach such a review, and that is that disability should be provided for in broadly the same way as old age and widowhood.
I hope that my hon. Friend the Minister of State will give an undertaking that between now and next year's budget the Treasury will carry out a full-going review and that in the next Finance Bill there will be a whole range of improvements in taxation allowances to assist the disabled of all categories. If we could have that undertaking, I am sure that most hon. Members would be satisfied with what the debate would have achieved.

Mr. William Hamling: I support what the hon. Member for Eastleigh (Mr. David Price) and what my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) have said so far. I wish to refer to new Clauses 21 and 22.
One Clause gives relief to mentally or physically infirm persons who employ a female person resident with them in the capacity of housekeeper, or maintain or employ any persons full-time as an attendant. The second deals with giving relief in respect of dependent relatives of a claimant who can show that they are dependent relatives resident with the claimant who is certified by a registered medical practitioner as being in need of


care and attention because of incapacity by mental or physical infirmity.
The group of taxpayers or citizens to whom I refer are mainly women. They are the women who care for physically or mentally infirm relatives. I have in mind particularly single women who look after their relatives, normally their parents but often a brother or a sister who is sick or incapacitated. That is a class of persons, who have been unknown for a long time. It is only in recent years that attention has been paid to their existence, let alone their social and financial needs. They are represented, as the House well knows, by the National Council for the Single Woman and her Dependent Relatives. That is a new charity but one which has been mentioned many times in the House in the last six or seven years. However, it is not the organisation which does the work but the women who compose the membership. I know that the Under-Secretary of State for Health and Social Security knows its work and is appreciative of it.
To that extent this is a matter which is outside party politics and excites compassion and support from all hon. Members. It is a matter which we have raised on many occasions previously with this Government and the preceding Government. I hope that the arguments which have been brought to bear over the years can now persuade the Government that the time has come to put into practice a reform for which Ministers have expressed sympathy in previous debates.
One of the characteristics of our income tax structure has been that it has been biased in favour of men. One of the characteristics of the first Clause is that for the first time it restores some of the balance regarding one class of taxpayer. I do not know why it is that in the past we have always tended to assume that it is all right for a man to employ a housekeeper and to claim tax relief in respect of her, but that incapacitated persons who employ a housekeeper are not recognised in the same way. That is a recognition by society of the helplessness of men.
However, here is a case where more is involved. We are recognising in the Clauses the job of caring for somebody. We are recognising it in two ways. First, we are providing tax relief for someone

who is employed for caring, and, secondly, we are recognising the caring done by the person who is herself a taxpayer.

9.45 p.m.

The economics of this are obvious. It will not cost the Treasury much. Single women in this position want their economic and financial independence. They do not want to be beholden to their parents or to have their income doled out to them. Many elderly parents think that a daughter of 45 is still juvenile, incapable of housekeeping and shopping with any degree of perspicacity. I have known a mother say to her daughter who has returned from a shopping expendition "That was not a very good bargain. I could have done better", the mother forgetting that prices have risen a great deal in the last 50 years.

One of the objects of these Clauses is to give these women a sense of independence and self-respect in the knowledege that the job they are doing is recognised by society.

An added economic advantage is that these women save the taxpayer millions of pounds over the years, because, if single women did not give up their independence, and in some cases their jobs, sacrificing their careers and their marital prospects, society would have to do the caring and pay far more than we ask for tonight.

These matters have been debated in Standing Committee. The late Iain Macleod felt passionately about these things and carried both sides of the Committee with him when he expressed sympathy. The matter has been debated on the Floor of the House. I hope that tonight the Government will, in a material way, recognise the importance and sense of social responsibility of thousands of women, a band of people whose praises are in the main unsung and who are, in their own opinion, insignificant.

Mrs. Elaine Kellett-Bowman: I support the comments my hon. Friend the Member for Eastleigh (Mr. David Price) made in asking for a comprehensive review of the tax allowances and allowances for those who go to the trouble of keeping their elderly relatives at home with them. I greatly agree with the hon. Member for Woolwich, West (Mr. Hamling) in that I do not believe that the country as a whole has the


faintest appreciation or the great burden borne by single women in looking after their elderly relatives.
I do not want a few fragmented amendments. I want the Minister to introduce a comprehensive review to give these women the rights to which they are entitled for taking this burden from us and performing their duty happily and uncomplainingly day in and day out, year in and year out.

Mr. Lewis Carter-Jones: Although I appreciated the remarks made by the hon. Member for Eastleigh (Mr. David Price), I am not prepared to wait for another year. Every time when we make this type of plea we are told that we are waiting for some report or for Go dot; it is always next year, over the hill, somewhere else, always tomorrow. Why not now?
We waited a long time for a report from the Department of Health and Social Security about the number of disabled people. Ministers at the Dispatch Box shook their heads when my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) and I asserted that there were 1 million disabled. That was denied but now the report has come out and we find that there are 3¼ million disabled waiting for help. We do ask not for jam tomorrow but for jam now. We can defer increases for men and women who are well off but we cannot afford to defer increases for these people any longer.
I am concerned about new Clause 9 because of subsection (2). If that subsection were accepted we could drive a coach and horses through all the other arguments, because the need of the disabled would be clearly recognised. They have four basic needs. They need mobility, they need to be able to communicate, they need access to places to which those who are not disabled have ready access and they need to be able to control their own environment. The satisfying of every one of those needs is possible. We are talking not about tomorrow in terms of technology but in terms of here and now, because these means exist now.
If there are any enemies of the disabled, they are in the Treasury; they are not in the Department of Health and Social Security. Any snags, restraints or

difficulties are imposed by the Treasury. The all-Party Disablement Group has won the battle we had with the Department of Health and Social Security. I wish I could take some of the Treasury knights to see some of these cases and find whether they have the guts to say that these people do not need help.
I shall give some simple examples. There is the wear and tear in the home of the disabled person who when he goes upstairs spins on his heels. That wears out stair carpets three or four times faster than the walking upstairs by people who are not disabled. Do not these people deserve consideration and a tax allowance? Are they not worthy of consideration? Then there is the fact that because of disability and because a person has shaky hands, there are frequently more breakages in the households of these people than in other households. Cannot this be taken into account? Is it not worthy of consideration? There is the problem of appliances for disabled people.
If all the equipment needed by disabled people were provided by the Department of Health and Social Security or by the local authority, my hon. Friend the Member for Wythenshawe and I might have no cause for complaint. But despite strong representations the Treasury, its knights or its representatives, still will not acknowledge that they will tax the sick on their appliances. I challenge the Minister of State to counter-attack me on this point. Incontinence pads, which have absolutely no other function, ought not to bear VAT. What possesses the Treasury to find a way of imposing VAT on them I shall never understand. So long as that kind of blank mind operates and that unfeeling attitude is adopted, Treasury Ministers ought not to be surprised if hon. Members become indignant, worked up and annoyed.
The Treasury has become so stupefied that it has provided that if we take a prescription to a chemist VAT does not apply, but that if we take precisely the same prescription to an appliance centre it carries VAT. The Treasury says "Well, there would be administrative difficulties in relieving these things of VAT," but it is prepared to claim back VAT on every prescription, no matter how humble, if it comes from an appliance centre. How administratively absurd can one get?
The Amelia Harris Report, for which we have all waited—I blame the last Government as much as the present one for the delay—tells us exactly how many people are in need. Action tomorrow will not do; certainly action next year will not do. It would be very pleasant if the Minister of State would accept the new Clause tonight.
If the Minister accepts the new Clause, hon. Members on both sides of the House will be happy. Subsection (2) will give great hope to disabled people, not only in respect of taxation but because the vital principle will have been established that disabled persons are regarded as special cases in terms of all kinds of taxation.
At this last moment, will the Minister of State please reconsider the position?

Sir Brandon Rhys Williams: Those hon. Members who tabled these new Clauses, especially new Clause 9, have done a service to the House in giving it yet another opportunity of showing its unanimity on the question of the need to do more for the disabled The hon. Member for Eccles (Mr. Carter-Jones) said that this was not a party matter. How right he was. Hon. Members on both sides of the House must convince the Departments concerned that we are not prepared to wait indefinitely for more to be done.
The House knows that the new Clauses are drafted in a peculiar way because of the rules of order. That means that they are not in a form in which the House would wish to legislate For that reason, those right hon. and hon. Gentlemen who tabled them will not expect them to be supported, except in the sense that we all want to make it absolutely clear that something more must be done.
I realise that the cost of our social services has been changed over the years by the rules of order which, in Budget after Budget, allow Members to recommend reductions in taxation but not increases in benefit. The hon. Member for Eccles, who said he wanted more jam, is wrong in thinking that that would be derived from the implementation of these Clauses, because they are negative. They would offer only the absence of

stick, which is not the same thing, if only for the simple reason that the benefit of the Clauses would not extend them to the poorest of all. They are available only to people within the tax ranges.

Mr. Carter-Jones: That was precisely the point I was making when I said that it was subsection (2) of new Clause 9 that was important, because it would be of considerable benefit to everyone involved, as it redefines the constant attendance allowance and the people who need the help.

10.0 p.m.

Sir B. Rhys Williams: The hon. Gentleman is right in pointing to the use of the constant attendance allowance as the correct solution to the problem of the handicapped people whose need is for income rather than tax concessions. As my right hon. Friend the Chancellor this year has announced that the Government are giving serious consideration to the introduction of a much broader system of positive tax credits, we can hope that something will soon be done. A start has been made in giving positive credits to the disabled. Opposition Members would not wish to be tardy in giving credit to the Department of Health and Social Security for the amount that has been done, but more must be done. We must work towards a disability income which will reach not just the most severely handicapped but everyone who is handicapped, including people who might, if they had a small subsidy, be encouraged to be completely independent and earn their own living.
Therefore, I should like to identify myself totally with the campaign for the provision of a disability income. I look forward to the publication of the Government's Green Paper on tax credits, which we expect from week to week. I hope that in it we shall have a clear statement of the Government's intentions with regard to the tax credits that will be made available to the disabled. It will be only a consultative document, but it will be improved if the Government make a clear commitment to the principle that disablement will be recognised as an entitlement to a special, higher tax credit, because nothing could be more encouraging to people in two minds as to whether they can bring themselves to the necessity to go out to work and overcome


their handicaps than the knowledge that society was on their side and was prepared to give them help. I hope that the consultative document will have specific recommendations for the House. If it does not, the House will have specific recommendations for the Government.

Mr. Laurie Pavitt: The House is probably at its best when it tries to grapple with this kind of problem and when hon. Members on both sides seek to put the maximum pressure on the Treasury Bench. The speech of the hon. Member for Eastleigh (Mr. David Price), like the speeches of other hon. Members, was full of constructive and helpful suggestions as to what should be done. We are unanimous on a number of measures that we hope to see. I echo the remarks of my hon. Friend the Member for Eccles (Mr. Carter-Jones) who said that we do not have to wait for perfection before going part of the way.
Having sat through so many Finance Bill debates, I can never understand how Ministers on the Treasury Bench, when everyone around is besieging them, stand stolid and four-square against all our arguments, debating skill and facts, saying that there are technical difficulties or that they are waiting till next year, when they will have the benefit of a comprehensive survey. We finish with pie in the sky tomorrow but very rarely a tax concession for tonight.
The hon. Member for Eastleigh made the point that we were concerned with care and cash, but mainly tonight with cash. I want to draw attention to the fact that the two are allied. A breakthrough has taken place in industrial therapy and there has been another major change in the past 10 years with regard to all kinds of disability, mental or physical. We have ceased to put the handicapped away in institutions and we are seeking, to the maximum of society's ability, to get them into the community as ordinary persons to the best of their physical and mental capacity. For that they want the same as everyone else—a degree of independence. It is difficult to talk about a paraplegic standing on his own legs, but he likes to feel that he is doing so.
Therefore, the concession for which we ask in new Clause 9 must be viewed in the light not only of common humanity and compassion but of the constructive

proposal it contains for the person seeking to cope with a disability and trying to do some work, although not as much as the person who is fully fit, and finding that the incidence of taxation means that the recompense he gets does not amount to what he would get if he were to resort to social security. At the same time, he slips back into accepting his disability when people with disabilities should be fighting them and not giving way to them.
The Treasury should consider the Clause not on those grounds alone but also in the light of the Tunbridge Report on rehabilitation, which came out only a fortnight ago. It is a question not only of a person's physical capacity but of his mental capacity to cope with his disability, apart from the care which is given him by means of modern medical skills and equipment.
I spent Friday with autistic children. In my Borough of Brent there are some excellent child guidance centres. I went to my neighbouring Borough of Ealing where the National Society has established an autistic centre. Parents of such children have a constant struggle in looking after them and therefore they should qualify for the constant attendance allowance. I find it almost impossible to to understand the reasoning of the comptometers of the Treasury or how it can be said that the small amount which would be required to implement new Clause 9 is not a justifiable public expense. In fact, it would not be an expense at all, because people have already earned the money.
It is difficult to understand why the Treasury will not accept a number of the proposals we make for the benefit of the disabled. A person can be maintained and work in sheltered or other workshops provided that he has the necessary appliances. If I may refer to my own disability, deafness, a person can continue to work in commerce or industry provided that his hearing is about 80 per cent. of the normal standard. That can be achieved by appliances. Yet although a carpenter has the tools of his trade allowed for tax expenses—

Mr. Hamling: Mr. Hamling indicated dissent.

Mr. Pavitt: If a person incurs legitimate expense in carrying on his employment he can claim an allowance. The


Treasury should be more than generous in giving tax allowances to disabled people who need appliances in order to continue their occupations rather than go on social security benefits. New Clause 9 and the two new Clauses in the name of my hon. Friend the Member for Woolwich, West (Mr. Hamling) seek to move in that direction.
In view of the priorities of the Bill and the amount it dispenses, it will ill become the Treasury if large tax concessions are made elsewhere and the people we are discussing are ignored. The chronically sick and disabled need constant attendance allowances, appliances and mechanical and other means of support. The hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) spoke eloquently of single people who look after aged parents. It is people like this who should be given the highest priority. I cannot see why they should not take priority over a number of other people for whom the Chancellor of the Exchequer has provided in the Bill. In view of the relatively small sum which the Clause involves, I hope that the Treasury will accept it.

Mr. Michael Meacher: Since the arguments have been put so fully, my contribution will be comparatively brief. I want strongly to support the new Clause because of the move that it represents, albeit a very modest one, to redress the balance between residential and community care in favour of the latter. At present we spend disproportionately far too much on residential care and nothing like enough on community care for the disabled.
A number of reservations have been rightly made about the Clause. The first relates to its very modesty, though no doubt that is an advantage when one puts it to the Treasury. The value of the Clause is something like £30 a year per disabled person under the unified system. That works out at about 60p a week. However, the extra real cost of looking after a severely disabled person who needs constant attendance has been estimated at £20 a week. So this is an extremely modest proposal.
I accept that the drafting is loose, and this applies especially to the criterion for

a disabled person in new Clause 9 as being
a person who is aged 70 or over".
That is taking it rather wide and in my view it would be far better if we added, as new Clause 21 does,
certified by a registered medical practitioner as being in need of care and attention
However it is only fair to add that 70 per cent. of the disabled are 65 and over; in other words the overlap between the elderly and the disabled is large, and if it be an objection at all it is a small one.
Tax relief on £100 is worth substantially less to the disabled person than a straight cash benefit of the same value. Many disabled people, either because their earnings are very low or because they are congenitally handicapped and have never earned, are below the tax threshold. However it is true that the advantage of this proposal is that the benefits under it would be spread very much wider than existing disablement benefits. Since these are drawn very narrowly under present regulations, this would be a considerable advantage.
A modest tax relief is substantially less important than a considerable extension of local authority personal social services, especially in terms of the home help service and the evening or night sitter-in service. It is broken nights which in the end so often lead to hospitalisation.
Despite these reservations or preferences, there are strong arguments in favour of the Clause. Relief would go to a great many more disabled people than at present get assistance under Government regulations. Only 70,000 disabled persons receive assistance under the attendance allowance Mark I. When we have the second phase and it is brought in fully by the end of 1974, it will still benefit only a further 250,000. The Amelia Harris survey indicates that there are 1¼ million persons over 15 who are disabled and living at home, and, as my hon. Friend the Member for Willesden, West (Mr. Pavitt) said, there are 3 million people with some form of impairment. Of these, more than one-third of a million are severely handicapped. Even when we have the attendance allowance Mark II fully phased in, there will still be a substantial number in great need in this category who will get no assistance. The Clause


would bring aid to those of them who are in severe need and who even under the present extension of the allowance will get no help in two or three years' time.
We ought to encourage families to look after their physically and mentally (handicapped members far more than we do at present. We ought not to penalise them financially. Yet that is what we do now. If a husband has a chronically sick or disabled wife and stays at home to look after her or hires some temporary help, he gets no assistance. In fact, because of the way the insurance system works, he can be penalised.

10.15 p.m.

This is a foolhardy attitude when the alternative is for hospital or some other form of residential care. Surely hospitals should be kept specifically for acute needs. I am sure everyone knows about the problem of bed blocking. Furthermore, hospital is not the most suitable medium for severely disabled people. It is much better that they or their families should have the option of the more preferential surroundings of their own homes.

Mr. Pavitt: If I may underline the point my hon. Friend is making, at St.

Thomas' and Westminster Hospitals the cost is £105 per bed per week.

Mr. Meacher: I am grateful to my hon. Friend. I was coming to the question of cost.
The strongest argument from the Treasury's point of view—the Treasury is the stumbling block—is that for once economic and social pressures are moving in the same direction. When on 15th June I asked about the cheapest form of hospital and residential care, the answer was that it amounted to £30 a week, a cost which had doubled over the last five years. In our present inflationary world, no doubt it will double again over the next five years. It seems extremely foolish to incur these enormous costs for what is not the most suitable environment for disabled people and to deny a considerable or even a modest extension of domiciliary care. If we can afford £30 a week, including free clothes, drugs and board and lodging in hospitals for the disabled, surely the Treasury can afford at least 60p a week for these same persons at home where all these things have to be paid for.
The Clause has considerable advantage in that not only is it modest in scope from the Treasury's point of view, but it would make a substantial contribution to the family care of disabled people.

Mr. Charles Simeons: I apologise to the House for not being here at the beginning of the debate. Perhaps a little ironically, I was in the presence of Group Captain Leonard Cheshire.
Whilst the Treasury is concerned about anomalies, disablement is an immense anomaly. There is no greater anomaly anywhere. The disabled are surrounded by anomalies. If they live in their own homes they receive far less than if they live in county council homes. If they live in a Cheshire Home the ratepayers pay the sum between the two. These are enormous anomalies which, whatever the Treasury may say, stare the disabled in the face.
When the disabled go out to work they can, and often do, receive less than if they live on the State. This is another anomaly which hurts their feelings enormously and requires our immediate attention.
The Treasury tells us that we should not introduce more anomalies; but we have to begin somewhere. I cannot help feeling that if the Treasury were threatened with dislocation of the tax laws because people ran amok and began supporting unreasonable new Clauses and Amendments, reason might be seen in connection with the disabled.
I hope that we shall hear more than we have before not just of good intentions but of action. I have been concerned with the disabled for a long time, although I do not claim to have had anywhere near the connection of so many hon. Members, particularly the hon. Member for Willesden, West (Mr. Pavitt), but I am sure we are all absolutely adamant that something must be done. We are fed up with platitudes.

Mr. Nott: Any Treasury Minister must have considerable difficulty in advising the House on new Clauses concerned with disability. These Clauses are intended to give additional relief to a deserving section of the community, and I know that both sides of the House recognise that fact.
There is, rightly, widespread sympathy in the country and in the House for people in these circumstances, and I refer here both to the disabled and to those who care for them, because they, too, are brought within the scope of these Clauses.

I think it is true to say that Treasury Ministers of both political parties have been, and are, placed in the unenviable position of having to answer these debates, and I hope that I may be able to help the House during my fairly brief remarks, but I am afraid that I am not going to be able to accept the new Clause on which the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) spoke so well.
We are assailed on all sides, and on many occasions during our debates, to simplify the tax system. At the same time, the House naturally has a genuine desire to assist the disabled and other deserving categories of persons and is often not slow, as indeed it has not been tonight, in suggesting new personal allowances which must greatly complicate the tax system. It is with this considerable and age-long problem in mind—it is one that has been with us for many decades, and I refer to the relationship between the tax system and the social security system—that the Government will shortly be publishing their proposals for a tax credit scheme, and this was referred to by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams).
I listened with particular care to my hon. Friend the Member for Eastleigh (Mr. David Price) and his request for a joint Treasury—Department of Health and Social Security review of disablement benefits. I think that he was thinking mainly not of tax allowances, but of certain cash benefits.

Mr. David Price: Both.

Mr. Nott: We have given significant help to that category of disabled person mentioned by my hon. Friend—namely, those who go to work. They were helped in last year's Finance Act, and they are in this year's Bill, in getting to work. Last year they received a concession on vehicle excise duty, and this year we have provided a maintenance allowance. This is not the point that my hon. Friend was making, but they are significant benefits for those who go to work.
My hon. Friend asked us to look at both the cash benefit side and the tax allowance side, and that is, in general terms, what the whole tax credit scheme


will be concerned with. I give my hon. Friend an assurance that as soon as the Green Paper is published—and it will be published later in the year—the whole question is bound to be debated very fully, and I undertake to draw the points that my hon. Friend has made to the attention of my right hon. Friend the Chancellor of the Exchequer and my right hon. Friend the Secretary of State for Social Services, who will jointly be responsible for introducing the Green Paper later in the year.

Mr. Hamling: When the hon. Gentleman is considering the Green Paper, will he bear in mind single women with dependent relatives? I am not sure that some of them will necessarily fit into the picture in the way that others might.

Mr. Nott: When we are considering a massive and radical reform of the whole relationship of social security to the tax system that kind of factor will be raised, and the hon. Gentleman will be free to raise it. If he does, it will be considered.
The hon. Member for Wythenshawe mentioned in passing the question of VAT. As he is fully aware, my right hon. Friend intends to set up a committee to consider the effect of VAT on children's shoes, and I have no doubt that the committee will take into account many of the special points he made on the subject. Those who require special footwear because of disability can obtain these shoes through the NHS now on the basis that they are obtained on an NHS prescription.
While I am on the subject of VAT I must again deny, in answer to the hon. Member for Eccles (Mr. Carter-Jones), that VAT is in any way a tax on the sick. It is totally untrue to say so. There is no reason why any sick or disabled person need pay VAT on an incontinence pad, which was the particular item mentioned by the hon. Gentleman. We debated this matter at considerable length in Committee on the Floor of the House, and what was said is in Hansard for the hon. Member to read.

Mr. Carter-Jones: It may well be in Hansard, but the point remains that there are disabled people who will still pay VAT on incontinence pads. If the Minister can here and now give a firm

assurance that they will not do so, I will withdraw what I said. Will he clearly state that incontinence pads for NHS patients will not bear VAT?

Mr. Nott: Incontinence pads for NHS patients, on the assumption that NHS patients are in NHS institutions or have obtained them on a doctor's prescription, will not bear VAT. That point was made perfectly clearly during the debates in Committee on the Floor of the House. I myself dealt with it at the time. I do not want to extend the debate to the subject of VAT, but I recommend the hon. Gentleman to look at the Official Report of those debates again.

Mr. Carter-Jones: I want to make sure that the Treasury gets the message.

Mr. Nott: The whole thing is in Hansard.
I must tell the House that the title of the new Clause is a little misleading. It is true that it would give an extra allowance of £100 to a taxpayer if either he or his wife required constant attendance because of physical or mental infirmity, but it would also go very much further. Anyone aged 70 years or over is also included in the definition of "disabled person", and consequently a major effect of the proposal would be to give an extra allowance to any taxpayer of 70 years or over as well as to taxpayers looking after someone 70 or over.
The relief to the over-70s would cost about another £45 million in a full year, but that is not in itself the principal reason why the proposal is unacceptable. The reason is that there are already provisions which give special tax allowances for the elderly, and successive Governments have taken the view that those allowances should go only to those with relatively modest incomes. The improvement of the tax position of the elderly should be by way of amendment of or addition to those provisions that we already have in the tax system rather than in the guise of a provision for giving tax relief for disability. The existing reliefs for the elderly have been reviewed this year, and the income limits for age exemption have been increased to £634 and £929 respectively.
The relief provided under the Clause would be fundamentally different from the existing reliefs—and I am still referring


to people over 70 who would come within subsection (2) of the Clause—for it would take the form of an additional allowance for all taxpayers of 70 or over, however wealthy they might be. Elderly taxpayers with relatively modest incomes should perhaps be given a margin of advantage over younger taxpayers, but there is a point beyond which it would be unfair to younger people to widen that margin even further or, indeed, to widen the category of elderly people entitled to the marginal advantage.
I come now to the question of the dependant relative allowance, because it is obviously very relevant to the debate. As the House knows, this allowance is given to the taxpayer who helps to support a relative incapacitated by old age or infirmity from maintaining himself or herself. The maximum amount of the allowance is normally £75, but where support of the relative falls on a spinster, a widow or a divorced or separated woman, the maximum amount of the allowance is £110. I shall come to the points made by the hon. Member for Woolwich, West (Mr. Hamling) shortly.

10.30 p.m.

This allowance is reduced by £1 for every £1 by which the relative's income exceeds £312. In deciding how much income the relative has, social security supplementary benefit is ignored. The Clause would go wider than the dependant relative allowance, in that the proposed allowance would be given irrespective of the size of the dependant's income. I do not believe that it is the genuine intention of the House that this new allowance should be given irrespective of the size of the dependant's income, unless the phrase in the Clause
has to provide for the requirements of
is intended to signify that in order to qualify for the proposed new allowance the dependant must have little income of his own.

As the Clause is drafted, I emphasise that it would go to dependent people who, in terms of income, do not require any additional help through the tax allowance system. That is the narrow point I am making. It is also an important point. I do not think that that is what the House is seeking.

The argument for allowing relief for a constant attendant has been that when a widow or widower in good health can claim an allowance for a resident housekeeper there is an even better case for an allowance for an incapacitated person who has to have constant attendance. This suggestion has been made for a great number of years, and it was considered by the Royal Commission on Taxation, which did not favour it. It has not been favoured by successive Governments. The Royal Commission thought that to give such an allowance would discriminate in favour of individuals employing such an attendant though others might incur such expense in other directions. That point is valid. But the real trouble in seeking to give a tax allowance in this kind of case arises from the need to have a clear, recognisable definition of the disabilities which would qualify. I want quickly to enumerate some of the practical problems which would arise.

First, except in the case of war disablement and industrial injuries, an elaborate system of medical assessment would be needed. Second, the degree of disability resulting from injury can be determined largely by a set of rules, but in the case of chronic illness or disabilities which may arise with increasing age an assessment is bound to be much more subjective and difficult to make consistently. There would probably be a very large number of claims, many of which would be on the wrong side of the line, causing considerable disappointment. Lastly, it would be very difficult, if not impossible, to maintain a test of 100 per cent. disability, which is what is suggested here, and further down the scale there would be increasing difficulties and disputes.

Mr. Dalyell: What does the hon. Gentleman mean by saying that claims would be on the wrong side of the line?

Mr. Nott: I was commenting that the Clause seeks a tax allowance for 100 per cent. disability. It would be difficult, and, regarding the practical side of it, the question of conformity to a set rule throughout the country, there is the problem that different doctors would give different judgments. But we are referring here to 100 percent. disability.

Mr. Hamling: No.

Mr. Nott: Perhaps we define the Clause differently, but I am taking the Clause as I read it.
We also have to keep in mind the existing relationship of the different tax allowances to one another. For instance, those who qualify would receive allowances of up to £175 and in the case of a single woman £210 in respect of the relative. But these would be considerably more significant than the extra allowances given to a married man, because at present the difference between the single and married allowances is £140. It would also be somewhat more than the child allowance for children under the age of 11, which is at £155, and this may or may not be desirable. But in dealing with the question of tax allowances we have to keep in mind the relation between each tax allowance.
May I draw my remarks to a close and say that the main point at issue is that the problem of severe disability is already dealt with through the social security system, and when my hon. Friend the Member for Luton (Mr. Simeons) said that we should start somewhere he was really doing my right hon. Friend the Secretary of State less than justice when one considers the very large number of measures which the Government have taken on behalf of the chronic sick and the very elderly. My right hon. Friend has not only started somewhere but he has actually gone a great way indeed to meet many of the problems which now exist.

Mr. Simeons: I am not in any way belittling the great steps which have been taken. But this is like beginning at the bottom of Everest and ignoring the top. Unless we realise the heights that we have got to scale, we are only just beginning the task.

Mr. Nott: I accept my hon. Friend's correction. We must, as he says, continually be pushing forward the frontiers in this area, and that is what my right hon. Friend is doing.

Dr. Tom Stuttaford: Surely the income of the patient is immaterial. Unless one is extraordinarily wealthy, one will not go to a private hospital. We should be encouraging people to stay at home, where they will be much better cared for. This is a very small degree of encouragement for the

patient to be cared for at home. The income of the people concerned, unless they are extremly rich, is immaterial. This is a very small incentive, and nothing else.

Mr. Nott: I am not sure what my hon. Friend means by "extremely rich". The fact is that a tax allowance is of no benefit whatsoever to those who are below the tax threshold. That is the point that I was seeking to make. It is for that reason that the Government have all along favoured, as, indeed, the previous Government did, providing these benefits by means of the social security system rather than from tax allowances.

Dr. Stuttaford: I am grateful to my hon. Friend for giving way again. Will he answer this question? Does he think that this is an incentive to patients to be kept at home rather than costing the nation many times as much in a hospital?

Mr. Nott: There might be some minor psychological encouragement—

Mr. Pavitt: Minor?

Mr. Nott: We are talking about an additional £100 allowance, but I really do not believe that this additional £100 would tip the scale in a decision of this kind. I do not think it is a strong enough reason for bringing in an additional allowance which would distort the existing relativities between the different personal allowances. I would point out to my hon. Friend that the Chancellor, in his Budget this year, has increased the personal allowances by just over £1,000 million. My hon. Friend should recognise that fact when he implies by his interjections that the Government are not doing enough.

Mr. Hamling: Mr. Hamlingrose —

Mr. Nott: I must draw my remarks to a close now.
The National Insurance Act, 1970, introduced the attendance allowance as a new benefit for the most severely disabled, and the allowance was put into payment from December, 1971. By May, 1972, well over 80,000 awards had been made, and claims are still coming in. The 1970 Act provides, broadly speaking, for the allowance to be paid to those who are in need of a great deal of attention or supervision both by day and by


night. The National Insurance Bill now before Parliament, in addition to increasing the present allowance from £4·80 to £5·40, will extend the scope of the allowance to bring in, broadly, those whose need for attention or supervision arises either by day or by night. This will help, we hope, as many as 250,000 people, as the hon. Member for Oldham, West (Mr. Meacher) said.
The Government are pledged to simplify the tax system. This can be done only if the tax allowances and reliefs are confined to broad and readily recognisable categories. Clearly, simplification will never be achieved if the Government are constantly pressed to accept new allowances to cover taxpayers whose situation hon. Members regard as specially worthy of consideration. The Government, like their predecessors, take the view that it is more appropriate to give help to the disabled through the social security system. Indeed, my right hon. Friends have acted in this way since the Government took office. I hope that the House will agree that it is through the social security system that this can best be done.

Mr. Dalyell: After all that happened in the Standing Committee, how can the Treasury now use the words "disability is already dealt with through the tax system"? The fact that a Treasury Minister can say that reveals once again the sort of advice which he and his colleagues have been receiving. On the question of children's shoes, we had it all out: they had not consulted the Chief Medical Officer. Have they learned nothing? Have the medical advisers of the Department of Health and Social Security been consulted? I cannot believe it possible that the Chief Medical Officer and others have been consulted if the Minister of State comes here with that of brief.

Mr. Hamling: Would my hon. Friend care to comment on the fact that one of the new Clauses is about single women going to work and looking after an elderly relative? It has nothing to do with social security.

Mr. Dalyell: We know that we are waiting for the Finer Committee, but Finer is now long overdue, and the news that reaches us is that he may not report

until next year. This is wholly unsatisfactory. As my hon. Friend the Member for Eccles (Mr. Carter-Jones) said, we are kept waiting for this committee and that.
We know from our experience on the Standing Committee that the Minister of State is not an evil-minded man. When he uses such words as "a minor psychological encouragement", his brief only reveals that the professionals of the Department of Health and Social Security have once again been ignored. All this has been cooked up in Great George Street, without professional advice. We discussed this at length in Committee. Once again, we must ask Treasury Ministers not to produce that kind of brief but to consult the professionals in Alexander Fleming House and the Government's other professional medical advisers.

Mr. Alfred Morris: If I have the leave of the House to speak again, we are deeply disappointed with the Minister's reply. It was a poor response to many stimulating and powerful speeches from both sides of the House. The force of the speeches from the Government's back benchers has been a feature of the debate. The hon. Gentleman has been asked again and again to address himself to the real purpose of new Clause 9 and the related Clauses.

10.45 p.m.

The hon. Member for Eastleigh (Mr.David Price) argued that the true answer is a national disability income, and I agree. I am certain that all my hon. and right hon. Friends will endorse what he said about the urgency of the need for a national disability income. If the alternatives before us were a national disability income or the Clause, all of us would accept the former. But those are not the alternatives. If we fail to sustain our arguments in support of the Clause there will be no immediate benefit for the disabled individuals and families whom we are seeking to help.

My hon. Friend the Member for Eccles (Mr. Carter-Jones) made the point very powerfully. He asked why we were waiting, why it is impossible now to take what is only a very modest step towards helping some of the most hard-pressed individuals and families? I accept what the Minister of State said about the drafting, but it is our tribute to the late Iain


Macleod that we left the Clause as he worded it when he wanted to put it into the Finance Bill in 1968.

Mr. William Clark: Did the Labour Government accept it?

Mr. Morris: It was never discussed and it was never pressed. Perhaps the hon. Member for Surrey, East (Mr. William Clark) was not here when I gave the actual reference from which I was quoting. If there are imperfections of drafting, we are prepared to await the Government Amendment which will fulfil the purpose we have in mind.
For the most part disabled people are very poor people. Disablement today is another word for poverty. The Clause would not help the poorest disabled but it would be an important step forward for the disabled if the Minister of State even now changed his mind and responded to the appeals made to him from both sides of the House. He said that it was not very pleasant for Treasury

Ministers to have to conclude debates of this kind. He said that he wanted to be listened to sympathetically. I agree that it is not very pleasant for Treasury Ministers to have to reply to such debates it their answers are based on briefs which reject what the House wants to do.

In rejecting our Clause the Minister has not addressed himself to the powerful cases put by my hon. Friends the Members for Eccles and Willesden, West (Mr. Pavitt), or Oldham, West (Mr. Meacher) and Woolwich, West (Mr. Hamling). It is because he is unable to change his mind that I ask my right hon. and hon. Friends to vote for the Clause. I hope we shall be supported by all those on both sides who have expressed their support for what we have said in the debate.

Question put, That the Clause be read a Second time: —

The House divided: Ayes 184, Noes 197.

Division No. 283.]
AYES
[10.49 p.m.


Abse, Leo
Duffy, A. E. P.
Jones, Dan (Burnley)


Albu, Austen
Dunnett, Jack
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)


Allaun, Frank (Salford, E.)
Eadie, Alex
Jones, T. Alec (Rhondda, W.)


Archer, Peter (Rowley Regis)
Edelman, Maurice
Judd, Frank


Ashton, Joe
Ellis, Tom
Kaufman, Gerald


Atkinson, Norman
Evans, Fred
Lambie, David


Bagier, Gordon A. T.
Ewing, Harry
Lamborn, Harry


Barnett, Guy (Greenwich)
Faulds, Andrew
Latham, Arthur


Barnett, Joel (Heywood and Royton)
Fisher, Mrs. Doris (B'ham, Ladywood)
Lawson, George


Baxter, William
Fitch, Alan (Wigan)
Leadbitter, Ted


Benn, Rt. Hn. Anthony Wedgwood
Fletcher, Raymond (Ilkeston)
Lee, Rt. Hn. Frederick


Bennett, James (Glasgow, Bridgeton)
Fletcher, Ted (Darlington)
Lestor, Miss Joan


Blenkinsop, Arthur
Foley, Maurice
Lever, Rt. Hn. Harold


Booth, Albert
Foot, Michael
Lewis, Ron (Carlisle)


Bottomley, Rt. Hn. Arthur
Ford, Ben
Lipton, Marcus


Broughton, Sir Alfred
Fraser, John (Norwood)
Lomas, Kenneth


Brown, Bob (N'c'tle-upon-Tyne,W.)
Freeson, Reginald
Lyon, Alexander W. (York)


Brown, Hugh D. (G'gow, Provan)
Galpern, Sir Myer
McElhone, Frank


Brown, Ronald (Shoreditch &amp; F'bury)
Garrett, W. E.
McGuire, Michael


Buchan, Norman
Gilbert, Dr. John
Mackenzie, Gregor


Campbell. I. (Dunbartonshire, W.)
Ginsburg, David (Dewsbury)
Mackintosh, John P.


Cant, R. B.
Golding, John



Carter, Ray (Birmingh'm, Northfield)
Grant, George (Morpeth)
Maclennan, Robert


Carter-Jones, Lewis (Eccles)
Grant, John D. (Islington, E.)
McMillan, Tom (Glasgow, C.)


Castle, Rt. Hn. Barbara
Griffiths, Eddie (Brightside)
Marsden, F.


Clark, David (Colne Valley)
Hamilton, James (Bothwell)
Marshall, Dr. Edmund


Cocks, Michael (Bristol. S.)
Hamilton, William (Fife, W.)
Mason, Rt. Hn. Roy


Coleman, Donald
Hamling, William
Meacher, Michael


Concannon, J. D.
Hannan, William (G'gow, Maryhill)
Mellish, Rt. Hn. Robert


Conlan, Bernard
Harrison, Walter (Wakefield)
Mendelson, John


Cox, Thomas (Wandsworth, C.)
Hart, Rt. Hn. Judith
Mikardo, Ian


Crossman, Rt. Hn. Richard
Hattersley, Roy
Millan, Bruce


Cunningham, G. (Islington, S.W.)
Healey, Rt. Hn. Denis
Miller, Dr. M. S.


Dalyell, Tam

Molloy, William


Davidson, Arthur
Horam, John
Morgan, Elystan (Cardiganshire)


Davies, Denzil (Llanelly)
Houghton, Rt. Hn. Douglas
Morris, Alfred (Wythenshawe)


Davies, Ifor (Gower)
Hunter, Adam
Morris, Charles R. (Openshaw)


Davis, Clinton (Hackney, C.)
Irvine,Rt.Hn.SirArthur(Edge Hill)



Davis, Terry (Bromsgrove)
Jeger, Mrs. Lena
Morris, Rt. Hn. John (Aberavon)


de Freitas, Rt. Hn. Sir Geoffrey
Jenkins, Rt. Hn. Roy (Stechford)
Moyle, Roland


Dempsey, James
John, Brynmor
Mulley, Rt. Hn. Frederick


Doig, Peter
Johnson, James(K'ston-on-Hull, W.)
O'Halloran, Michael


Dormand, J. D.
Johnson, Walter (Derby, S.)
O'Malley, Brian


Douglas-Mann, Bruce
Johnston, Russell (Inverness)
Oram, Bert


Driberg, Tom
Jones, Barry (Flint, E.)
Orme, Stanley




Paget, R. T.
Silverman, Julius
Wainwright, Edwin


Palmer, Arthur
Simeons, Charles
Walker, Harold (Doncaster)


Pardoe, John
Skinner, Dennis
Wallace, George


Parker, John (Dagenham)
Small, William
Watkins, David


Pavitt, Laurie
Spearing, Nigel
Wells, William (Walsall, N.)


Pentland, Norman
Spriggs, Leslie
White, James (Glasgow, Pollok)


Prentice, Rt. Hn. Reg.
Stallard, A. W.
Whitehead, Phillip


Prescott, John
Steel, David
Whitlock, William


Price, J. T. (Westhoughton)
Stoddart, David (Swindon)
Willey, Rt. Hn. Frederick


Rhodes, Geoffrey
Strang, Gavin
Williams, Mrs. Shirley (Hitchin)


Roberts, Albert (Normanton)
Stuttaford, Dr. Tom
Williams, W. T. (Warrington)


Roberts,Rt.Hn.Goronwy (Caernarvon)
Summerskill, Hn. Dr. Shirley
Wilson, Alexander (Hamilton)


Roper, John
Thomas,Rt.Hn.George (Cardiff,W.)
Wilson, William (Coventry, S.)


Rose, Paul B.
Thomas, Jeffrey (Abertillery)
Woof, Robert


Ross, Rt. Hn. William (Kilmarnock)
Thomson, Rt. Hn. G. (Dundee, E.)



Sheldon, Robert (Ashton-under-Lyne)
Torney, Tom
TELLERS FOR THE AYES


Short, Rt.Hn. Edward (N'c'tle-u-Tyne)
Tuck, Raphael
Mr. Joseph Harper and


Silkin, Rt. Hn. John (Deptford)
Urwin, T. W.
Mr. James Wellbeloved.


Silkin, Hn. S. C. (Dulwich)
Varley, Eric G.





NOES


Adley, Robert
Gilmour. Sir John (Fife, E.)
Morgan, Geraint (Denbigh)


Atkins, Humphrey
Goodhew, Victor
Morgan-Giles, Rear-Adm.


Awdry, Daniel
Gower, Raymond
Morrison, Charles


Baker, Kenneth (St. Marylebone)
Grant, Anthony (Harrow, C.)
Mudd, David


Barber, Rt. Hn. Anthony
Gray, Hamish
Murton, Oscar


Batsford, Brian
Green, Alan
Neave, Alrey


Beamish, Col. Sir Tufton
Grieve, Percy
Noble, Rt. Hn. Michael


Bell, Ronald
Griffiths, Eldon (Bury St. Edmunds)
Normanton, Tom


Bennett, Sir Frederic (Torquay)
Grylls, Michael
Nott, John


Benyon, W.
Gummer, Selwyn
Oppenheim, Mrs. Sally


Berry, Hn. Anthony
Gurden, Harold
Osborn, John


Biggs-Davison, John
Hall, Miss Joan (Keighley)
Owen, Idris (Stockport, N.)


Blaker, Peter
Hall, John (Wycombe)
Page, Rt. Hn. Graham (Corby)


Boardman, Tom (Leicester, S.W.)
Hall-Davis, A. G. F.
Page, John (Harrow, W.)


Body, Richard
Hannam, John (Exeter)
Parkinson, Cecil


Boscawen. Robert
Harrison, Col. Sir Harwood (Eye)
Percival, Ian


Bossom, Sir Clive
Havers, Michael
Peyton, Rt. Hn. John


Bray, Ronald
Hicks, Robert
Pink, R. Bonner


Brinton, Sir Tatton
Higgins, Terence L
Powell, Rt. Hn. J. Enoch


Brocklebank-Fowler, Christopher
Hiley, Joseph
Price, David (Eastleigh)


Brown, Sir Edward (Bath)
Hill, John E. B. (Norfolk, S.)
Prior, Rt. Hn. J. M. L.


Bryan, Sir Paul
Hill, James (Southampton, Test)
Proudfoot, Wilfred


Buck, Antony
Holland, Philip
Pym, Rt. Hn. Francis


Butler, Adam (Bosworth)
Hordern, Peter



Carr, Rt. Hn. Robert
Hornby, Richard
Ramsden, Rt. Hn. James


Chapman, Sydney
Hornsby-Smith,Rt.Hn.Dame Patricia
Rawlinson, Rt. Hn. Sir Peter


Chataway, Rt. Hn. Christopher
Howell, Ralph (Norfolk, N.)
Redmond, Robert


Churchill, W. S.
Hunt, John
Reed, Laurance (Bolton, E.)


Clark, William (Surrey, E.)
Iremonger, T. L.
Rees, Peter (Dover)


Clarke, Kenneth (Rushcliffe)
James, David
Rees-Davies, W. R.


Clegg, Walter
Jenkin, Patrick (Woodford)
Renton, Rt. Hn. Sir David


Cooke, Robert
Jessel, Toby
Rhys Williams, Sir Brandon


Cooper, A. E.
Johnson Smith, G. (E. Grinstead)
Ridsdale, Julian


Corfield, Rt. Hn. Frederick
Jopling, Michael
Roberts, Wyn (Conway)


Cormack, Patrick
Kellett-Bowman, Mrs. Elaine
Rost, Peter


Costain, A. P.
Kershaw, Anthony
Russell, Sir Ronald


Critchley, Julian
King, Evelyn (Dorset, S.)
St. John-Stevas, Norman


Crouch, David
Kinsey, J. R.
Scott-Hopkins, James


Crowder, F. P.

Sharples, Sir Richard


d'Avigdor-Goldsmid.Maj.-Gen.James
Knox, David
Shaw, Michael (Sc'b'gh &amp; Whitby)


Dean, Paul
Lamont, Norman
Shelton, William (Clapham)


Deedes, Rt. Hn. W. F.
Lane, David
Skeet, T. H. H.


Dykes, Hugh
Langford-Holt, Sir John
Smith, Dudley (W'wick &amp; L'mington)


Elliot, Capt. Walter (Carshalton)
Le Merchant, Spencer
Soref, Harold


Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Longden, Sir Gilbert
Speed, Keith


Emery, Peter
Luce, R. N.
Spence, John


Eyre, Reginald
McAdden, Sir Stephen
Stainton, Keith


Farr, John
MacArthur, Ian



Fell, Anthony
McCrindle, R. A.
Stanbrook, Ivor


Fenner, Mrs. Peggy
McLaren, Martin
Stewart-Smith, Geoffrey (Belper)


Fidler, Michael
Macmillan,Rt.Hn.Maurice (Farnham)
Stoddart-Scott, Col. Sir M.


Finsberg, Geoffrey (Hampstead)
McNair-Wilson, Michael
Stokes, John


Fisher, Nigel (Surbiton)
McNair-Wilson, Patrick (NewForest)
Taylor,Edward M.(G'gow,Cathcart)


Fletcher-Cooke, Charles
Madel, David
Taylor, Frank (Moss Side)


Fookes, Miss Janet
Mather, Carol
Tebbit, Norman


Fortescue, Tim
Maxwell-Hyslop, R. J.
Temple, John M.


Foster, Sir John
Mitchell,Lt.-Col.C.(Aberdeenshire,W)
Thomas, John Stradling (Monmouth)


Fox, Marcus
Mitchell, David (Basingstoke)
Thomas, Rt. Hn. Peter (Hendon, S.)


Fry, Peter
Moate, Roger
Tilney, John


Gardner, Edward
Money, Ernle
Trafford, Dr. Anthony


Gibson-Watt, David
Monks, Mrs. Connie
Trew, Peter


Gilmour, Ian (Norfolk, C.)
Monro, Hector
Turton, Rt. Hn. Sir Robin







Vaughan, Dr. Gerard
Wells, John (Maidstone)
Woodnutt, Mark


Vickers, Dame Joan
Wiggin, Jerry
Worsley, Marcus


Walder, David (Clitheroe)
Wilkinson, John



Walker, Rt. Hn. Peter (Worcester)
Winterton, Nicholas
TELLERS FOR THE NOES:


Walker-Smith, Rt. Hn. Sir Derek
Wolrige-Gordon, Patrick
Mr. Paul Hawkins and


Weatherill, Bernard
Wood, Rt. Hn. Richard
Mr. Hugh Rossi.

Question accordingly negatived.

New Clause 18

INCREASE IN RELIEF FOR BLIND PERSONS

'In section 18 (relief for blind persons) of the Income and Corporation Taxes Act 1970 for "£130"wherever it occurs there shall be substituted "£200" '.—[Mr. Pavitt.]

Brought up, and read the First time.

11.0 p.m.

Mr. Pavitt: I beg to move, That the Clause be read a Second time.—[Interruption.]

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order.

Mr. Pavitt: I believe that we are discussing with the new Clause—[Interruption.]

Mr. Deputy Speaker: Order. When I ask the House to come to order, I expect hon. Members to obey the Chair.

Mr. Pavitt: I believe that we are also discussing the new Clause in the name of the hon. Member for Plymouth, Devon-port (Dame Joan Vickers), new Clause 29,

Relief for blind persons

'Section 18 of the Income and Corporation Taxes Act 1970 (Relief for blind persons) shall have effect with the following Amendments—

(a) in subsection (1), for "£100"in both places where that figure occurs, there shall be substituted "£200"; and
(b) in subsection (2), for "£200" in both places where that figure occurs, there shall be substituted "£400" '.

The Clause should command the support of both sides of the House. I am pleased to see the hon. Member for Chelsea (Mr. Worsley) here, because he moved a similar Clause very eloquently in 1968.

I shall not delay the House for very long. We are not asking for pity or sympathy for blind people. I rest my case solely on the economic consequences of the way in which the value of money has changed since the original disregard of £100.

Blind people get about quite slowly, but not quite so slowly as Governments move. The disregard arose from the Royal Commission Report of 1952. It was not until June, 1962, that the Government of the day decided that there should be a disregard of the first £100 of a blind person's income. In spite of the efforts of the hon. Member for Chelsea and the hon. Member for Harwich (Mr. Ridsdale) in 1968, that sum has not been altered.

There is no need for me again to argue the case about the need for people to live in the community in spite of their disability. Blind persons want work. There are 11·9 per cent. of those who could be working who are at present unemployed.

The new Clause merely seeks to bring the rate originally conceded in the Income and Corporation Taxes Act, 1970, which stemmed from the decision of 1962, up from £130 to £200. The hon. Lady's new Clause would increase from £100 to £200 the figures in other parts of the Act.

I have every sympathy with the Minister who is to reply. If the brief he is to present to the House is anything like the last one, he deserves more of the sympathy of the House than the disabled or the blind. I beg him to accept the Amendment, which involves only a small amount, so that the House may proceed to the rest of its business.

Dame Joan Vickers (Plymouth, Devon-port): I was fortunate enough in 1962 to be successful in originating the original Clause, and therefore I support what the hon. Member for Willesden, West (Mr. Pavitt) said. I should also like to speak to my new Clause.
Speaking to the new Clause introducing relief for blind persons in July, 1962, Mr. Brooke, now Lord Brooke of Cumnor, said that the blind were in a very special category, and he spoke of the great courage of
blind men and women who are earning their living as teachers, musicians and in other walks of life".—[Official Report, 2nd July, 1962; Vol. 662, c. 231.]


I agree that they have courage. Many of them could stay at home and not play the part in life which they wish to play, yet the taxes on them are the same as for a sighted person. Lord Brooke pointed out in that speech that if a blind man received National Assistance or was war-disabled or had suffered an industrial injury, he would not benefit from the Clause. The only people who would do so were those with the courage to go out and work for themselves. Therefore, the Chancellor then thought it right to introduce the Clause, as he thought the blind were a unique case. They are still unique, and I hope that the Government will recognise that what was said in 1962 is equally applicable today.
In view of what the hon. Member for Willesden, West said about the value of money today, the blind certainly need extra help. Their expenses are considerably more than those of a normal person. Blind people are generally extremely proud. They have to give extra tips in order to get help, which perhaps is not the best way of doing it but it is essential today, and they must seek their living in the open market and compete with sighted people. It was for this reason that my proposal was accepted in 1962. Therefore, I can see no logical reason why my present proposal should be refused.
Mr. Brooke said in 1962 that the Chancellor of the Exchequer had been
particularly impressed by the arguments put forward by
myself, I am glad to say,
that the blind formed a special and, indeed, a unique category."—[Official Report, 2nd July, 1962; Vol. 662, c. 230.]
The category has not changed. The Government's intention may be to change the tax system altogether, but until it is changed I hope that blind people will have the increased benefit which they have earned in line with the increase which was granted them 10 years ago. I trust that my hon. Friend will give way on the Clause on the condition that as and when the taxation system is changed these people may have to relinquish this benefit in order to obtain another.

Mr. Dalyell: A number of us attended a meeting organised by the National Association for the Blind in Committee

Room 14 three weeks ago. My hon. Friend the Member for Willesden, West (Mr. Pavitt) was present.
This problem must be seen in the total context and not simply from the point of view of this tax or that tax. What struck a number of us about that meeting, apart from any contact which we may have had in our constituencies, was the way in which the official representatives of the blind thought that far more couldbe done to give them work through Government purchasing. They outlined in some detail the sort of work which they thought blind people could have. That was one of their main points, and I hope that the Treasury will take it on board.

Mr. Nott: The hon. Member for Willesden, West (Mr. Pavitt) spoke on this subject in the Budget debate, and over the weekend I again read his comments on that occasion. He has had an Early Day Motion down on the Order Paper on this topic.
The present allowance is £100, or£200 if both the husband and wife are blind. Under the unified system the amounts will be increased to £130 and £260 respectively. The figure which the Hon. Gentleman proposes should be increased is that for the unified allowance, and it may be therefore that he intends that it should not take effect until 1973–74. I do not know whether that is his intention, but he has raised a general point, and I shall answer in that spirit.
My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) proposes in new Clause 29 that the relief should be given this year. I appreciate that it was partly in answer to her appeal that the present allowance was introduced. The blind person's allowance is an allowance in addition to the basic personal allowances and any other allowances which may be due to a blind person. The £100 must be looked at besides the personal allowances to which blind people are entitled. If we were to agree to the £200 which is proposed, it would, for example, amount to almost three times the maximum amount which a person can claim for a dependent relative or almost twice that allowable when the claimant is a single woman.
The argument comes back to the point I made on an earlier new Clause. We are seeking to try to keep the relation of one


allowance in line with another. My right hon. Friend, in producing his substantial concessions and tax allowances this year, looked at all these matters at the time, but did not feel able to increase this allowance.
Blindness is the only form of disability which qualifies for an extra tax allowance. As I mentioned earlier, we have not found it practicable as yet to give a special allowance to people suffering from other forms of disability. Substantially to increase the blind person's allowance at this time would add to a sense of injustice felt by other people. I think that is probably a fair argument.

Dame Joan Vickers: If so, why was not a sense of injustice felt previously when the allowance was granted?

Mr. Nott: I will answer my hon. Friend's point. That was a matter for the then Chancellor in 1962. We are now moving into a period in which we shall be considering the whole future régime of tax allowances and benefits. It is not appropriate, when we are about to introduce a Green Paper on the tax credit scheme, to make changes to the minor tax allowances. By "minor" I mean that this is not one of the major tax allowances such as the general personal allowance.

Mr. Pavitt: If £100 were right in 1962—that is worth only £50 in relation to the whole structure of what the blind person is now receiving—why is it wrong to increase it up at this time? We are not asking for any more. We are asking for proportionately the same as they had before. Ten years have elapsed. A blind person who has been working for the last ten years has in each year lost something from the original amount that was given. Will the Minister address himself to the Stewart Report of 1962 which made a further demand which the then Government resisted?

Mr. Nott: I appreciate that the blind person's allowance which was introduced in 1962 has fallen in value. The same argument applies naturally to, and is used to support claims for increases in, all the other tax allowances right across the board. It was in recognition of this argument that my right hon. Friend substantially raised personal allowances in this year's Budget. Blind people who are liable to tax will, like other taxpayers,

benefit substantially from the increases in personal allowances from £325 to £460 for single people and from £465 to £600 for married people. Certainly the value of this allowance has fallen, but clearly this was looked at by my right hon. Friend when he decided to increase personal allowances generally by about £1,000 million. Of course, blind people are entitled to any rise in the threshold in general personal allowances. That is the way my right hon. Friend sought this year to alleviate the problem of falling values in which reference has been made.

Mr. Pavitt: Does the Minister recognise, on the generality of tax concessions, that the 1952 Royal Commission made out a special case for the blind? The hon. Member for Plymouth, Devonport (Dame Joan Vickers) was able to emphasise that in 1962. Now, 20 years later, the hon. Gentleman is denying the whole basis of the Royal Commission's Report, the Stewart Working Party, and the hon. Lady's representations.

Mr. Nott: I am not denying the basis of the recommendations by people who have examined the matter. I am merely saying that this year my right hon. Friend chose to give the relief on personal allowances generally and that blind people will benefit substantially from that relief. I have, however, listened with interest and sympathy to my hon. Friend and to the hon. Member for Willesden, West. I assure them that the whole question of tax allowance is to arise shortly and will be publicly debated as part of the new tax credit Green Paper. We shall look into these matters then.

11.15 p.m.

Dr. Gilbert: What is the hon. Gentleman's estimate of the cost of this minor allowance?

Mr. Nott: I do not have the figure now, but I shall let the hon. Gentleman have it as soon as I get it.

Dr. Gilbert: Treasury Ministers come to a debate of this nature singularly ill-prepared. These are reasonable new Clauses, and if the hon. Gentleman does not have this sort of information he ought to have it. It is something akin to a serious discourtesy to the House not to have it available. I suspect that the figures are quite insignificant.
Earlier, the hon. Gentleman was boasting about the allowances given by the Chancellor, amounting to about £1,000 million.

Mr. Nott: The cost of doubling the allowance would be about £2 million.

Dr. Gilbert: I suspected that it was something like that. It is just as well to have that in the open. I should be surprised if, after getting that information, the hon. Gentleman would be prepared to make the speech that he made a few moments ago.
I ask the House to consider the other concessions made in the Budget. They are: £30 million for relief of capital gains on unit trusts; £7 million for interest relief; £14 million for surtax payers; £115 million for free depreciation; and £45 million for small company relief. The Chancellor stood at that Box on 21st March and reeled off concession after concession, nearly all of them designed to make the division of income and wealth more unequal than it was before. That was the purpose of the Budget. [Interruption.] The Budget was intended to make ours a society more unequal than it had been because to do so was regarded as a stimulus, and yet the Government refuse to grant a relief of £2 million.

Mr. Dalyell: For the benefit of hon. Members who have just joined the debate may I tell the House that at about five o'clock this afternoon there was a concession, ironically of £2½ million, for on-course betting for racing?

Dr. Gilbert: I am obliged to my hon. Friend. I do not withdraw one word of what I said. This is the whole sentiment behind the Budget. The allowances provided by the Budget were supposed to give people an incentive. If the Government are prepared to give £1,000 million as an incentive mainly to the better off section of the community, I am surprised that they are not prepared to give £2 million as an incentive to blind people.

Question put and negatived.

New Clause No. 23

TAX RELIEF FOR CAPITAL EXPENDITURE ON BUILDINGS IN USE FOR THE PURPOSES OF HOTEL RESTAURANT OR CATERING BUSINESSES

'The Capital Allowances Act 1968 shall be read and have effect as if—

(1) in subsection (1) of section 7 thereof there were included the following paragraph: —
(j) for the purposes of an hotel restaurant or catering business and

(2) in subsection (3) of section 7 thereof the word 'hotel' wherever it appears were omitted, and the words 'retail shop' shall not include a restaurant or catering business" '.—[Mr. Rees-Davies.]

Brought up, and read the First time.

Mr. Rees-Davies: I beg to move, That the Clause be read a Second time.
The purpose of the Clause is to include as an industrial building or structure under the provisions of the Capital Allowances Act, 1968, the hotel and catering industry. It is a Clause of immense importance, of overriding importance, to the hotel and catering industry, and one which will not only arise this year but will clearly become of great importance next year.
I say that for a number of reasons. For many years, ever since I have been in the House of Commons, contrary to what we believe is right, the hotel and catering industry has been treated as though it were a shop or an office. It has been treated, if I may say so, as an ordinary club or business, and has not been regarded as being properly constituted as an industry. I have never been able to understand why this is so, and I propose to advert briefly tonight to some of the arguments advanced in Committee by my hon. Friend the Chief Secretary to the Treasury in dealing with certain of the fundamental arguments.
Anyone who knows this industry today recognises that an hotel is purpose built, a restaurant is purpose built, a factory is purpose built, but, in a way, a retail shop or office may not necessarily be purpose built. Consequently, the need for a general relief to my mind seems clear. Recognising that it is unlikely that I shall at this hour achieve the financial purpose of the Clause, I am quite frankly putting forward my arguments to ensure


that they are fully mulled over and appreciated for the real drive in this field next year.
I do that for two reasons. First, I want to draw attention tonight at once to the position that obtains in every other Common Market country, and in the United States of America, because in every single instance there is given the type of allowance that we today seek in this country; that is to say, neither any Common Market country, nor the United States of America treats the tourist industry as a mere shop. It is not a shop. It is an industry.
Let me start at once by saying that in the United States of America the industrial allowances on a straight line basis are assessed on the life of the building, subject to an agreement, over a period of 25 years at 4 per cent. per annum. It is similarly dealt with in most other countries. For example, in Holland it is dealt with on a straight line basis of 2 per cent. over 50 years or, alternatively, negotiable on a reducible balance at a higher rate of 10 per cent., the depreciation being calculated on the cost and the reducing balance being calculated on the cost less depreciation.
Belgium is very much the same as Holland. In the case of Belgium it has 5 per cent. on the straight line basis over 20 years, with a reducing balance rate of 12½ per cent. Spain makes provisions which are immensely favourable in many ways with regard to the cost of the actual buildings that are provided for hotels, but it also provides for depreciation on a straight line basis of 3 per cent. on 33¼ years. Italy gives immense advantages, but they depend very much on the area in which the building is taking place and very special provisions apply if the buildings are in the south of Italy or in mountain areas. In West Germany, on the straight line basis, it is 2 per cent. with, again, various particular allowances. In Sweden it is 2½ per cent. and in Denmark it is 4 per cent. Those are all on a 10-year basis thereafter with regard to depreciation.
Therefore I think we can establish the case which I ask the Treasury to look at very carefully over the next year and to recognise that when we enter the Common Market, unless we are prepared to

accept the case which I propound tonight we shall find ourselves on a very different competitive basis from that of any other country in the Common Market or the United States of America.
I turn to what has been done here by successive Governments. The Labour Government are entitled to say that they did something in this direction. They introduced the Development of Tourism Act. They thought they would have under it grants totalling only about £10 million to £11 million, but so successful were their proposals for grant and loans that in grants alone over £50million has been provided for over 60,000 bedrooms. That means that we have now a substantial stock of what I call the better class of room. But it does not mean that we have been able to achieve what no doubt the Labour Government intended to achieve—that is, the provision of reasonably priced accommodation in many parts of the country; nor were they able to deal with the vital question of the modernisation of the smaller hotels and boarding houses in places such as Blackpool, Bournemouth, Torquay, Brighton, Hove and the Isle of Thanet.
In the Isle of Thanet, only two hotels were able to take advantage of these provisions. This was because under the Labour Government one could not without great difficulty borrow money from the banks. The interest rates were so high that the smaller boarding houses did not have the money to be able to secure the provision of loans and therefore to get the grants available. We are thus left with a tourist industry with a great many first-class bedrooms which have had the advantage of grants and loans to the tune of about £50 million but which has not the modernisation that is required.
In order to secure the modernisation and development of the industry, we need to take further steps, for the provisions under the1968 Act began in 1971 and are to be phased out by 31st March, 1973. This means that the Treasury must make preparations to ensure that alternative facilities take over which will be much more beneficial to what I call the lower end of the business in order to ensure that there is structure depreciation and obsolescence relief in respect of gradual depreciation and run-down of hotels.
What we want to achieve is the development of the hotel and catering industry to the highest standard so that it can compete. This country has never been able to compete in such provision. It is becoming very difficult to fill the 93,000 vacancies for waiters, barmen and others in the industry by our own people. The result is a great shortage of those required to service the industry. Young people want to enter an industry that is not out-dated. Those trained in the well-known and first-class Thanet Technical College, for example, want to go into establishments which are purpose-built, where they can see the prospects of a first-class career.
The industry is not in the same situation as offices and shops. A hotel may become out of date and require extensive modernisation. I know that I will be supported in this argument by my hon. Friend the Member for Bristol, North-East (Mr. Adley), who has declared his interest as a director of Holiday Inns. Can one imagine Holiday Inns, or Grand Metropolitan Hotels, or Trust House-Forte or any of the other smaller modern groups regarding themselves as being committed to other than purpose-built hotels and the facilities which go with them? The same applies, of course, to caterers. Unless the Government allow building depreciation relief before assessment to tax in order that the hotels can finance their replacement when they become obsolescent, we shall have in the future the same situation as we have had in the past.

11.30 p.m.

We want to ensure a continuation of the stimulation which the Government have done much to achieve. They have done a great deal last year and this year and it would be mean not to give them credit for it. They have secured the abolition of SET and they have done a great deal about corporation and income tax. They have improved capital allowances. Next year this industry will have to carry VAT, as will everyone else. When this happens they will find themselves subject to a tax which will apply to Europe as it applies to this country, but without the benefit of the advantages which Europe gives to its hotel industry. It recognises the great need to continue with the development of tourism.

We know that this year for the first time, we topped the 7 million mark for tourists and when we continue to have a large inflow of tourists from all over the world we must make sure that we do not turn this redevelopment away from our shores. British hotel companies with enterprises in the United States, Belgium, Holland, France or Spain not only receive the equivalent of industrial building allowances they also receive, as we now provide, for example in Ulster, special allowances over a period of years which enable them to amortise their buildings so that it costs them virtually nothing. This is particularly true in Italy.

Tourism is not merely a major export earner; hotels are also the principal link in this chain. With our entry to the European Economic Community they will become even more important. Earlier today the Minister dealt with the question of fire precaution allowances. He was unable to meet that case. I venture to point out that this comes under this case in due course. It would be part of the capital allowances which will attract relief, if the Government are able to say that this is something which should be treated as an industry. I hope I am right—I do not claim to be an expert—in saying that any money expended in a factory on fire precautions would attract that kind of benefit.

I know of practically no case which has been more widely supported. It has been supported by a very able report by the Hotel and Catering Economic Development Council. The report by Cooper Brothers and Co. on hotel investments reinforced its conclusions. The Council report said that unless a greater incentive was given to invest in this class of hotel—and it was referring not to the Max Josephs of this world but to the smaller people—then the high capital cost of making an investment, both of construction and borrowing, would be
a main cause of the low profitability of investment.
It went on:
The EDC considered a number of alternative ways in which incentive to invest might be provided by the Government, amongst which was extending to hotels the investment assistance at present given to industrial establishments. It can be argued that returns on hotel investment are low because the taxation system discriminates against hotel investment. We examined the effect of the rate of


return on investment if the assistance at present given to industrial establishments were extended to hotels. This solution would involve the extending of industrial building allowances to hotel buildings. The implementation of this measure would materially increase the rate of return on capital involved.

More recently, they have made another investment study and they support that view.

It seems to me, therefore, that a case has been made. The Government are entitled to say that they have done a great deal in the past year for this industry and that a great deal has been done to encourage it generally and therefore, it may be that they feel that they need to go no further this year. I would, however, ask for an assurance from the Minister that this matter will be looked at very carefully and, in particular, that the situation in countries overseas will be carefully analysed.

I hope that having carried out that analysis, and bearing in mind the views of Neddy, of the British Tourist Authority and, indeed, of the Millard Tucker Report as long ago as 1951, the Government will come to the conclusion that it is time next year to implement the view not merely of the industry but of all those who have closely examined this problem and to see that we receive at least a reasonable measure of industrial building allowances in accordance with the lines suggested in the new Clause by myself and a very large number of my hon. Friends.

Mr. Patrick Jenkin: My hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) has developed in his customarily powerful way a case which I and the House know is very near to his heart. I listened with great care to all he said about the tourist industry and its importance and the need for the Government and the country to encourage its development. Speaking as a Treasury Minister, with particular regard to the importance of the industry for the balance of payments, I endorse a great deal of what he said.
Tourism—in which I include not only the provision of accommodation and catering but also transport, entertainment and the retail sales we make to tourists—has been a growing invisible export in recent years. In 1971 the United Kingdom had over 7 million visitors from abroad, a 5 per cent. increase on the

previous year, and they spent £491 million, an increase of 13 per cent. over 1970. That left us with a balance of payments surplus on the travel account of £53 million, the highest figure ever recorded. If one adds in the fares paid to carriers, the surplus rises to £84 million. By any standards these are substantial figures. They represent a considerable advantage to our economy and he would be a very rash Treasury Minister who failed to take account of them.
As I think my hon. Friend recognises the great value of the tourist industry to the economy is appreciated by the Government, as it has been by their predecessors, in a variety of ways. My hon. Friend has referred to the reductions in taxation, the promise of the abolition of SET, the reductions in corporation tax and income tax and the improved capital allowances.
The actual figures of cash support for the industry in the current year may be of interest to the House. In 1972–73 the Government are giving to the tourist authorities £6,150,000 in the form of grants in aid. There are projects in the development areas amounting to £1 million and grants and loans under the Hotel Development Incentives Scheme, to which my hon. Friend referred, are this year costing the Exchequer over £17 million There are, in addition, the sums being paidvia the Development Commission and the Highlands and Islands Development Board of about £1,177,000. The total comes to almost £25½ million in direct aid of one sort or another to the tourist industry.
If the new Clause were to be accepted, we estimate—inevitably this must be something of a "guestimate"—that the cost would be about £15million a year to the Exchequer. Therefore, the degree of assistance which would be provided by a capital allowance of the sort my hon. Friend seeks is rather less in the current year than the amount of Government aid being given to the industry. I do not need, perhaps, to go into any greater detail of what form this aid takes. I have given the outline figures. I think that I have said enough for the House to recognise that it is very substantial.
The hotel incentive scheme—I shall return to this shortly—far exceeded any of the estimates given at the time because, as was said in an earlier debate


this evening, a number of large and powerful companies saw the opportunity to meet a substantial part of the cost of building new hotels, mainly in London it is fair to say, at the public expense and there has been a great and wholly unprecedented boom in the building of large first-class hotels.
My hon. Friend made the point very well when he said that under the Act there had been the provision of some 60,000 additional rooms. But the case he is making is that in addition to all the cash assistance which has been given under the various Acts to the British tourist industry, there should be capital allowances on the same basis as allowances are available, and have been since 1945, for factories and other industrial structures.
That is an argument we have heard on a number of occasions; it is none the worse for that. It is an argument to which I referred in Standing Committee when we discussed a new Clause about football stadia. It was an argument we heard earlier today in relation to the constructional work required under the Fire Precautions Act, 1971.
At the risk of boring the House, I briefly repeat the reasons why successive Governments have not felt able to extend the industrial buildings and structures capital allowances to commercial buildings. Firstly, many commercial buildings do not depreciate as rapidly or as inevitably as do industrial buildings or structures; indeed, many of them appreciate in value. Secondly, once one moved the line of demarcation from factories and industrial buildings of that sort to take in some commercial buildings—whether they be hotels or hotels and restaurants, or whether one extended them to football stadia and other buildings to which the public have access—in a tax system that has to apply as fairly as possible to the whole range of activities in this country, in practice it would be impracticable to hold the line at any intermediate point.
Whatever one might say when such an allowance was introduced, the pressure would be inexorable and it would be almost inevitable that it would be acceded to and that one would move the whole way to giving capital allowances to all

commercial buildings. The cost of that, as I have said, would be likely to amount in time to between £250 million and £300 million a year, requiring, in order to pay for it, an increase of about one-sixth in the rate of corporation tax; increasing, shall we say, from50 per cent. to 60 per cent. the illustrative rate for the reform of corporation tax next year. I do not believe that that is a prospect which the House would welcome with enthusiasm, whatever be its interest and concern for the tourist industry. If we could confine it to the tourist industry, at a cost of £15 million, this would by itself be supportable. But all experience shows that once one seeks to draw the demarcation at a different point, there is almost no point at which it could stop.

11.45 p.m.

Mr. Rees-Davies: I take my hon. Friend's point that there have been these special advantages to the extent of about £23 million to which he has adverted, but those are non-recurrent to a large degree. I am not asking for success this year. Would I be right in my assessment that this would be non-recurrent to quite a large degree so that next year, if he were to grant this estimated £15 million, he would be no worse off revenue-wise than this year? If we can find a definition, as there was in the Development of Tourism Act, confining this to hotels and drawing a tight line, we could surely contain his second argument which is that the definitory line is so loose that it would open the door too wide.

Mr. Jenkin: I take the point. I think that next year there will still be substantial sums paid under the Hotel Development Incentive Scheme. The buildings had to be started by last year and, I think, finished by next year. Quite a lot of money will be paid in arrears, and I suspect that they will still amount to considerable sums in 1973–74.
With regard to my hon. Friend's second point, I do not think the question is one so much of seeking to define the buildings to which the particular allowances which he seeks would extend. The problem would be to seek to defend that line against the arguments—and they would be powerful arguments—which would be advanced by other industries which have perhaps foreign exchange earnings comparable with those of tourism. Some of


the insurance, banking and other industries of this sort, which also occupy commercial buildings which do not qualify for capital allowances, also could point to their value to the economy. This is the difficulty that I see.
Although one can understand that the tourist industry—and my hon. Friend rightly used the word "industry"; it is now recognised as an industry—has a special claim for concessions from the Chancellor, it would be very difficult to defend this against the many other industries which would feel, with some justification, that they would have an equal claim. This is the case on which I principally rest my advice to the House not to accept my hon. Friend's Clause. Indeed, he indicated that he was laying down a marker for next year.
There is one other argument to which I should address myself. It was put to the Government mainly by the British Tourist Authority, and it is based upon this tremendous upsurge in the provision of hotel accommodation which has taken place as a result of the Hotel Development Incentive Scheme. The argument was that unless the industry is helped by capital allowances it will not be able adequately to utilise the extra accommodation which the scheme has provided. This is a somewhat odd argument because it means that so enthusiastic were the industry to jump in and take advantage of the Hotel Development Incentive Scheme that by their own admission they have made a substantial over-investment and a substantial over-production of the kind of accommodation which has been created as a result, and that they can therefore expect to make themselves pay only if their cash flows are improved by the provision of a capital allowance.
That is not an argument which Treasury Ministers can be expected to regard with much enthusiasm. The argument might well be addressed mainly to the extent to which the development scheme exceeded its original intentions. As my hon. Friend rightly said, the big firms took the maximum advantage of it. Not much of the advantage has gone to the regions and to the small individually owned hotels, restaurants and so on which might have expected to benefit. I cannot regard it as an argument by itself

to support the proposal for capital allowances.
I must advise the House that, in common with our predecessors, and their predecessors, we do not feel able at the present juncture to contemplate extending the industrial capital allowance outside the field to which it already applies. This is in no way to decry the importance of the tourist industry or to seek to deny that the Government have a great interest in its health and the prosperity which it brings to this country. But my hon. Friend is seeking to extend an industrial allowance to buildings which are, by their very nature, non-industrial, which are commercial buildings, and this is something which the tax system at present does not embrace and which, as I say, Governments of all parties have felt unable to adopt.
My hon. Friend has indicated that he does not propose to press the new Clause tonight. We shall, of course, study his arguments with care. He advances them with great authority, and he backs them up with figures, referring also to the little Neddy Report. We shall study carefully what he said, but, in saying that. I should not like to be taken to be holding out any prospect that we may feel able to go along the road he has indicated for us.

Mr. Rees-Davies: I thank my hon. Friend for all he said in his usual very able and lucid way. I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave, withdrawn.

New Clause 31

REDUCED RATE OF ESTATE DUTY ON CERTAIN AGRICULTURAL LAND

'Where any shares in or debentures of a company in respect of which estate duty is chargeable on a death fall to be valued by reference to the value of the company's assets in accordance with section forty-six or section fifty-five of the Finance Act 1940 the duty shall be charged at the reduced rates for the time being in force for the purposes of section twenty-three of the Finance Act 1925 on such proportion of that net value as is attributable to the agricultural value (within the meaning; of the said section twenty-three) of agricultural property let by the company for the purposes-of husbandry or forestry or, where the occupation is partly for those and partly for other purposes, the part of that agricultural value


which ought justly to be apportioned to the occupation for those purposes'.—[Mr. More.]

Brought up, and read the First time.

Mr. Jasper More: I beg to move, That the Clause be read a Second time.
This Clause is of practical importance. It could be of real help to agricultural land owners and, if accepted, it would not be materially injurious to the Revenue. It has three statutory predecessors: the Finance Act, 1925, which first introduced the agricultural abatement rate; the Finance Act, 1940, which introduced the valuation of companies' assets by reference to the special code of valuation which it incorporates; and the Finance Act, 1954, which extended the agricultural rate to land held by a family company if that land was actually in the company's occupation.
This leaves what might be called an anomaly, in that, if a family company owns land which is let, that let land does not on the relevant death benefit from the agricultural abatement. I regard this not as injurious to the agricultural interest or in any sense as a grievance but as an inconvenience and something which is positively unpractical.
Not every land owner is in a position to form, or wishes to form, an estate company. But there are families for whom a company structure is the most convenient and most practical way of carrying on an enterprise. It may bring the great and definite advantage of avoiding the fragmentation of an estate, particularly where there are numerous relatives involved. It facilitates the participation of a number of people in the use of assets which physically remain intact. The advantage of this has been recognised to a certain degree in previous fiscal legislation, notably in connection with corporation tax.
The major problem is capital taxation and many families for whom it would be a practical advantage are prevented from forming agricultural estate companies merely by the consideration that they risk losing the 45 per cent. abatement on the land which is let. The object of the Clause is simply to bring the position of let land into line with land which is occupied and farmed by the company and to propose that the existing 45 per

cent. abatement which applies in the case of let land owned by individuals shall be extended to let land when it is owned by a family company.

Mr. W. Benyon: I support my hon. Friend the Member for Ludlow (Mr. More) and I must declare my interest as an owner of agricultural let land. It is totally illogical that when an owner of agricultural let land dies he is entitled to a 45 per cent. rebate on all his agricultural holding, whether it is in hand or whether it is let, but if he is a shareholder in the company his shareholding is valued on an asset basis and the part the company is itself farming gets the 45 per cent. rebate but the let land does not. Not only is that illogical but it militates against proper organisation of modern farming and the introduction of capital from outside into the farming enterprise.
Curiously, the landlord—tenant relationship has become more and not less important in recent times with intensive farming requiring large amounts of capital. Yet every disincentive is now put on the owner of agricultural land, whether he is the owner in his own right or the shareholder in a company letting land. The number of tenants is gradually being reduced, as the recent statistics show. One of the most powerful disincentives of all is the death duty consideration. In many cases by far the most efficient and correct method of running an agricultural enterprise is by company formation.
In another context the Chancellor has already recognised the value of the company structure of family businesses as a whole by the changes he has made in corporation tax. To a certain extent I call in aid Chapter 13.6 of the Bolton Committee Report on Small Firms. Admittedly the report was referring to small industrial businesses and I am referring to those engaged in husbandry or forestry, but the point remains good. The cost to the Exchequer would be nil. No one in his right mind will form an agricultural company with the present death duty provisions. There would be therefore no net loss to the Exchequer by agreeing to the Clause. I hope my right hon. Friend the Chancellor will give consideration to the matter in the future.


12 midnight.

Mr. Nott: As the House knows, agricultural land which passes on death enjoys special relief in the form of a 45 per cent. reduction in the amount of duty payable. The relief also applies where what passes on the death is a block of shares in a family company valued on an assets basis; there is relief of 45 per cent. of the duty on the proportion of the value of the shares attributable to agricultural land used for the purposes of husbandry carried out by the company itself, but not where the company lets the land.
The Clause would extend 45 per cent. relief to cases where the company lets the land. I have to admit straight away that there is some logic in the argument put forward by my hon. Friends the Members for Ludlow (Mr. More) and Buckingham (Mr. Benyon) about the tax system not standing in the way of families farming and letting their land in the way which they think fit. However, I have to say to my hon. Friends that, for reasons which I will explain, it is not an appropriate moment for us to extend 45 per cent. relief. It is an important relief and, although there are categories of property which enjoy it, there will inevitably be pressure from many different categories to extend it.
In giving an example, I will refer quickly to the Bolton Committee which was referred to by my hon. Friend. He mentioned one point that the Committee recommended, but it also recommended that the 45 per cent. relief should be extended to the ownership of industrial land and buildings, whether or not the landlord used them for a trade.
The Committee pointed out that there is some element of discrimination in the existing law relating to agricultural land. The 45 per cent. relief is given by reference to ownership only, and it could be argued that the 45 per cent. relief for shares in a company farming its land, which was introduced in 1954, or the existing relief for agricultural land let by an individual, which dates from 1925, is too generous.
That is a matter which I should not wish to argue in this case. However, it cannot be denied that, if the Clause were accepted, which would extend the estate duty relief in the manner proposed,

the gap between the family industrial business and the family agricultural business would be widened further. The Bolton Committee referred to this point.
The principal reason why the Clause is not acceptable to the Government is that the 45 per cent. relief, together with many other matters, will have to be considered fully in the review of estate duty following the publication of the Green Paper, which will set out a possible inheritance tax as an alternative to the present estate duty.
My hon. Friends will be aware that the points which they made in moving the Clause will most appropriately form part of the general discussion which will be developed in the Green Paper. It is for that reason that I should like my hon. Friends not to press the Clause. The whole question of taxation of capital on death is under review and it would not be sensible for us now to take on board a point of importance but nevertheless of detail.

Mr. More: I am grateful to the Minister for what he said. No section of the community is more aware of the importance of the Green Paper and the general review which it contemplates in death duty taxation than the agricultural land-owning community. It is good to be told that regard will be given in the general review to the special point which has been raised in the Clause. In the light of what my hon. Friend said, I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave withdrawn.

New Clause 34

CAPITAL GAINS TAX: TAPERING RELIEF

Subsections (4), (5) and (7) of section 20 of the Finance Act 1965 and subsections (3), (4) and (5) of section 21 of that Act shall be amended to include the word "tapered" before the phrases "chargeable gain" and "chargeable gains" wherever they occur and before the phrases "allowable loss" and "allowable losses" wherever they occur, and section 22(9) of the Finance Act 1965 shall be amended to include at the end of the following: —
Provided that, for the purposes of subsections (4), (5) and (7) of section 20 of this Act and of subsections (3), (4) and (5) of section 21 of this Act, any chargeable gain or allowable loss computed in accordance with the said Schedules shall be reduced by tapering to the extent of one-twentieth of


that chargeable gain or allowable loss for every completed year from the date of acquisition to the date of disposal, both dates inclusive, and any chargeable gain or allowable loss so reduced shall be referred to as a tapered chargeable gain or as the case may be, as a tapered allowable loss".—[Mr. Peter Rees.]

Brought up, and read the First time.

Mr. Peter Rees: I beg to move, That the Clause be read a Second time.
It is trite to observe that we must review from time to time the scope of our taxes and their rates by reference to the rates of inflation that are prevalent. This is important when the rates of inflation are at 2 per cent. or 3 per cent., as they were before 1964, but it becomes even more important when the rates of inflation are rising at a steeper pitch. The higher rates serve only to emphasise the harsher aspects of our system of taxation which my right hon. Friend has done so much to ameliorate in the last two Budgets.
The income tax and surtax rates have borne hard on people who by no present standard are well off. Until recently, surtax started at £40 per week, which I understand is the current going rate for a docker. It is possible to draw a different inference from that, and I might do so on another occasion. Estate duty clearly bears harshly on estates which by no stretch of the imagination could be called those of the wealthy class when houses of a relatively modest scale change hands at £15,000.
Capital gains tax provides the harshest examples. As I understood the tax when it was introduced in 1964, its authors designed it as a tax on capital gains in the truest sense. If property doubles in price over 20 or 30 years by the mere process of inflation, it must be self-evident that capital gains tax is in many cases charged on nothing that is in any real sense a gain. Over the past few years capital gains tax has become depressingly akin to a wealth tax. This may commend it to right hon. and hon. Friends opposite, but I hope that it will not commend it to my right hon. and hon. Friends.
This is the simple justification for the Clause, which is designed to taper down to nothing over a period of 20 years a capital gain or, by the same process, a

capital loss. In other words, a capital gain or loss is reduced by one-twentieth each year that the asset is held by the taxpayer, so that over 20 years there will be no gain or no loss.
The relief that is envisaged by the Clause may be crude in its operation, but I hope to be forgiven for observing that the tax is relatively crude in its operation. In a sense, this relief carries on the thinking introduced in the Finance Act, 1962, in the taxation of short-term gains, because such gains are largely of a speculative nature.
I hope that that House will feel that there is a qualitative distinction between gains of a short-term or speculative nature and gains accruing on the disposal of assets which have been held for a long time. The Clause is designed to introduce a measure of elementary justice in the economic climate of the times, and I hope that it will commend itself to the House and the Government on that basis.

Mr. James Ramsden: I welcome the presence on the Front Bench of my right hon. Friend the Minister of Agriculture, Fisheries and Food. The Clause, although it is of general interest, is of special concern to the farming industry. I declare an interest in that I farm.
My hon. and learned Friend the Member for Dover (Mr. Peter Rees) was right to emphasise the consideration arising from a high rate of inflation in the past and its effect upon the capital gains tax. The case for an abatement, for tapering relief in the case of assets which have been held for a long time, is this. I accept the justice of the capital gains tax when people sell assets to live, so that they can, by making a capital gain, maintain a standard of life or maintain an income level in circumstances where the growth in share value, for example, has replaced the growth in income after tax.
The case is different when, as in the case of land, people tend to sell the asset only when obliged to do so by dire necessity. In the nature of things, farmers want to hang on to their land. A disposal probably takes place only when the farmer wants to hand on to his son or for some other reason, usually prompted by hard necessity. It is a rather different case, and falls outside what I at any


rate understand as the original justification for the introduction of capital gains tax.
Therefore, I would see some equity in a tapering relief on gains which are very largely paper gains and the result of inflation, along the lines advocated by my hon. and learned Friend. His argument, which I support, applies not only to farms but to other categories of small businesses where the disposal of an asset and the consequent chargeable gain may make the continuous running of that business a matter of great difficulty if it does not have ready access to loan capital, as is the case with many small firms.
I hope that my hon. Friend the Minister will look with some favour on the Clause. We are encouraged to think that he may because of the answer given by one of the Treasury Ministers on25th April indicating that the question of tapering relief, was under consideration. I hope we shall hear the outcome of those considerations.

Mr. David Mitchell: I, too, declare what interest I have in the same context and also mention that in supporting the Clause I have the support of the Small Business Association, as I believe a number of my hon. Friends also have in this connection. I have some criticism of the Amendment, because 20 years is a long time, and I believe that in the context of the economy as it stands today 10 years might be more appropriate. But a little is better than nothing.
My first point is that the capital gains tax, without such a tapering device as is proposed, is a disincentive to new entrepreneurial activity. We have seen from the Bolton Report that that is one of the factors which the Bolton Committee noticed. We all know how important it is at present to have new businesses as the seed bed for future prosperity. With our entry into the Common Market, that is even more true. These businesses can, if they grow, as they will if they are encouraged, also provide considerable employment.
Secondly, there is the taxation of paper gain. This point was put very well in the Committee stage of our consideration of the 1965 Measure, by my hon. Friend the present Financial Secretary. I will

not embarrass him by quoting what he said. It was also put very well by my hon. Friend the Chief Secretary in a publication, "Taxes for Today", published by the Bow Group, in which he said:
In the first place, it would be unjust to tax 'paper profits'—profits that are not genuine because they are due to a rise in monetary not real values. To do so is confiscatory.
He was right to take that view.
I am particularly glad to see my right hon. Friend the Minister of Agriculture, Fisheries and Food here. I join in pressing upon him the view being expressed increasingly by some farmers, especially those who are owner-occupiers of their farms, who want to pass the business on to their sons. It is not a case of selling. They do not want to break up the holding, but they have not the money to pay the tax when they pass the farm on to their sons.
Thirdly, there is the locking-in effect, a considerable distortion of business. We have old men hanging on in business who should have retired, and small businesses which should be amalgamating into larger and more viable units. This is not happening because there is a locking-in effect and a disincentive to older people to retire, knowing that when they do a large slab of their capital will be removed from them.

12.15 a.m.

It is fair to say to the Chancellor that the whole of the philosophy on which he has based the change in corporation tax this year to the imputation system is founded on the recirculation of money through the Stock Exchange. If there is a locking-in device preventing people from changing stocks and shares and moving into the growing industries and out of the old, we are, through capital gains tax, vitiating part of what the Chancellor is trying to achieve by the changes in corporation tax.

Capital gains tax is a discouragement to plough back into industry. Many of us know of businesses the proprietors of which are faced with the choice of ploughing money back into the business or taking it out and going on holiday or buying a yacht, or whatever it may be. The disincentive to ploughing back is that, not only must a person have to pay corporation tax, but he must recognise


that he is building up an ever-greater liability to capital gains tax which at some stage will have to be paid. In most family businesses there is a life cycle of about 20 years, which means that once every 20 years there must be a massive loss of working capital from the business and a long period, when the younger generation comes in, of retrenchment, which is the very reverse of what is in the national interest.

In a recent Parliamentary Answer it was revealed that £850 million has been withdrawn from the private sector in capital gains tax since 1965.This money would be better left providing work and enterprise in the business community rather than being withdrawn into the maw of the Government. The tax is cumulative in effect. It is damaging and distorting and a disincentive to change. I hope that the Government will heed the comments made tonight and assure us that next year they will propose changes along lines of the Clause.

Dr. Gilbert: We on this side are not in sympathy with the new Clause. It seemed to me implicit in what the hon. and learned Member for Dover (Mr. Peter Rees) said—and I hope that I am not distorting what he said—that it was only short-term gains which were speculative and that longer-term gains had acquired a patina of respectability which meant that they did not qualify for the sort of relief proposed in his new Clause. We do not accept that distinction between short-term and long-term gains, although we recognise that they have had different tax treatment in the past.
One can hold penny stocks for a long time and wind up with a very large gain which was just as speculative when it arose whether one had had it for a short or a long time. One can think of many examples closer to home, such as the affairs of Mr. Harry Hyams, which have lately attracted much attention. As I understand the new Clause, all Mr. Hyams has to do is to hang on for about 12 years and he will get the whole of his capital gain on Centre Point without paying a penny of capital gains tax. If that is the intention of hon. Members opposite, then we dissent entirely from their philosophy.
We understand the basic point that one can have taxation of paper profits in

some circumstances. While recognising that, we see no other form of income that is receiving the sort of relief against inflation that is proposed for capital gains in the new Clause. Therefore, if enacted, it would contribute further inequity to the tax system.
Furthermore, in commenting on what was said by the hon. Member for Basingstoke (Mr. David Mitchell), I found it a little far fetched that he should pray in aid that capital gains tax is an incentive to people to spend their money on wild consumption rather than ploughing it back in what was apparently a profitable industry. I do not wish to make too much of that point. I merely want to point out that the speeches we have heard so far from hon. Gentlemen opposite find no echo on this side of the House.

Mr. Nott: If capital gains tax could be looked at in isolation there might be a case for eliminating the inflationary element in chargeable gains; but capital gains tax cannot be looked at in isolation because inflation affects everyone in relation to their resources and outgoings. If the Government were to make a concession for capital gains tax payers to take account of inflation there would be pressure for action to protect other groups.
I thought it would be helpful if I quickly rehearsed on this occasion a few of the arguments on the other side because my hon. Friend the Member for Basingstoke (Mr. David Mitchell) has made this point in Committee, and it is frequently made in the House. Therefore, I will put one or two of the objections to this principle.
There are grounds for suggesting, for instance, that there should be an adjustment of the computation of trading profits to take account of inflation in both the value of stocks and the cost of replacing capital assets. Investors in savings banks and building societies—indeed, in any investment on which there was no question of a possible capital gain arising—could claim that in real terms their investments showed a loss over a period and that their incomes from the investments ought not to be taxed except in so far as they exceeded their real loss of capital. For National Savings and Government securities it would be likely to raise again the whole


question of making these investments inflation-proof by some kind of indexing. Finally, for wage and salary earners in general the Government might be asked to undertake that personal allowances would always be increased so as to ensure that increases in income which merely compensated for inflation did not produce higher tax charges.
I appreciate that all these points are arguable and could be debated long into the night. However, capital gains tax cannot be considered in isolation when we are talking about inflation; it has to be considered in the wider context.
The House will be aware that inflation exercises its effects on most aspects of our national life. Certainly the Government are fully aware of inflation on tax liabilities in general. That is why we shall keep this point under review, as indeed my hon. Friend the Member for Basingstoke has been told on several occasions both at Question Time and in Committee upstairs. The House will appreciate that there would be unfortunate implications—I put it no higher than that—when the Government's policy is to conquer inflation, if we considered building into the tax code a provision to mitigate the effects of inflation on the tax liabilities of one particular group.
I could put forward arguments why I feel that the system suggested in the new Clause is not the most appropriate to be used if we wished to work a taper into the system. I think that it would be better to arrange it in such a way that the purchase price was adjusted for the fall in the value of money which had occurred over the period so that the tax itself would be payable in the same depreciated currency as the disposal and the cost would be written up by a necessary amount to allow for inflation. That would be rather a different way from the system proposed in the new Clause.
Basically, the problem is one of singling out one type of taxation and giving that some inflation-proofing when inflation affects tax liabilities and people's outgoings generally. There is also one further practical point, on which I should not rely, but I mention it briefly. Tapering of any kind would introduce substantial complications into the capital gains tax system at a time when the Government are trying, I think with some degree of success, to simplify tax computations and

to improve the whole administration of the tax system.
I say to my hon. Friends who have made this point before—and they are resourceful in making it in the House—that my right hon. Friend has noted it. I cannot give any assurances, but we shall keep the matter under review. I hope that that will be sufficient—

Mr. Ramsden: I notice that my right hon. Friend the Minister for Agriculture is here. Would he and my hon. Friend undertake to look at this point. We have an agriculture policy which aims at amalgamating holdings and creating larger units, and we have a fiscal policy which will inevitably have the effect of fragmenting those units. There is a contradiction and a problem which requires to be studied. If my hon. Friend gives an undertaking that he will look at it seriously, I think that we shall be much encouraged.

Mr. Nott: I appreciate the point made by my right hon. Friend. The question of the break up of agricultural estates is recognised in estate duty law. On the previous Clause we dealt with the 45 per cent. relief. I appreciate the point made by my right hon. Friend on farm amalgamation schemes. In certain circumstances these work in the opposite direction, but that does not get rid of the general point that I was making, namely, that we are being asked to work inflation-proofing into the system for one category of taxpayer. Although we understand the point being made and will keep it under review, I cannot go further than that.

Mr. Peter Rees: My hon. Friend, with his customary lucidity, has highlighted all sorts of problems thrown up by inflation in the tax system. Unfortunately, he shrank from the inevitable conclusion that the whole system should be subject to review.
I demur at my hon. Friend's statement that the Clause introduces an element of complication, because this is one sphere in which he and my right hon. Friend have done nothing to reduce the complications, although they have removed deemed disposals from the charge to tax.
However, on my hon. Friend's assurance that he will keep the whole system under review and in the confident expectation that my right hon. Friend will reduce


inflation to acceptable levels, I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave withdrawn.

New Clause No. 37

SEPARATE ESTATE FOR MINERAL INTERESTS IN LAND, AND SPECIAL RATE OF ESTATE DUTY THEREON

(1) Where an estate, in respect of which duty is payable on the death of a person dying on or after 6th April 1972 includes a minerals interest in land, the value of such interest shall not be taken into account in estimating the principal value of the estate, or the estate rate.

(2) Duty in relation to such interest shall be payable, in accordance with subsection (3) of this section, as though it constituted a separate estate, at a special rate of 30 per cent., or at the estate rate if lower.

(3) Duty at the rate specified in subsection (2) of this section shall be payable on the net monies, after deducting all necessary out goings since the death of the deceased, which may from time to time be received by way of mineral royalties, or on the proceeds of sale of the interest or a part thereof, during the period which may elapse until the interest, on the death of some other person, again becomes liable to duty, and the owners or trustees of such interest shall account for and pay duty with interest at the rate of three per cent. per annum from the date when such monies or such proceeds are received.

Provided that the eventual total of the duty payable under this subsection shall not exceed the duty which would have been payable but for this sub-paragraph.

(4) For the purposes of section 29 of the Finance Act 1970, in ascertaining the amount of mineral royalties there shall first be deducted from the gross sums received the amount of any estate duty which by virtue of subsection (3) of this section is payable out of the mineral royalties receivable in respect of the minerals interest, only the remainder being recognised as within the scope of the said section.

(5) For the purpose of this section—
minerals" means all minerals and substances which are ordinarily worked for removal by underground or surface working, but excluding water, peat, top-soil and vegetation; and
mineral royalties" means so much of any rents, tolls, royalties and other periodical payments in the nature of rent payable under a mineral lease or agreement as relate to the winning and working of minerals.—[Mr. Peter Rees.]

Brought up, and read the First time.

Mr. Peter Rees: I beg to move, That the Clause be read a Second time.
The Clause is designed to remedy the situation created by renewed interest in the exploration for minerals. As my hon. Friend the Financial Secretary will be replying to the debate I merely draw attention to tin in Cornwall, fluor spar in the Pennines and copper in North Wales. It must be in the national interest to exploit these minerals. Indeed, this was recognised by the introduction of the Minerals Exploitation Act, the Second Reading of which was so ably moved by my right hon. Friend the Member for Bournemouth, West (Sir J. Eden), and there was a notable contribution from the hon. Member for Swansea, West (Mr Alan Williams).
It was calculated during the debate that the import of non-ferrous minerals last year amounted to about £600 million. If we were able to work up our own non-ferrous metals we would save imports to the tune of £100 million a year.

12.30 a.m.

In this context it is obviously crucial that the tax system should do nothing to discourage the granting of mineral leases. In the old days there were many long leases granted for the exploitation of coal, but coal was normally worked over a very long period and small royalties were paid so that the incidence of tax and estate duty was bearable. But now when minerals are discovered they are worked at a very intense rate over two or three years so that very considerable royalties are often paid to the land owner. On the death of an owner that double burden of income tax and surtax and estate duty may produce a net rate of as much as 23s. in the £.

That situation was recognised by the previous Administration in the 1970 Finance Act, by Section 29 of which royalties from the exploitation of mineral rights were taxed on an entirely new basis—half to income tax and surtax and half to capital gains tax. I therefore commend the Clause as an extension of the thinking behind the 1970 Finance Act, and I pay my tribute to Members of the Opposition who no doubt supported that Measure.

The scope of the Clause is that mineral rights should be valued as estate on their own, separate from the principal estate of the deceased, and duty should be charged at 30 per cent.—a quite arbitrary


figure, I admit—or at the rate applicable to the rest of the estate on the assumption that it may be less. But the crucial point is that the duty would be payable when the royalties became payable or when the land owner sold the mineral rights for a capital sum and the sale proceeds were received. The duty is to be charged upon the royalties or the sale proceeds, but at a rate in total not exceeding 30 per cent. or the estate rate on the rest of the estate. Until the royalties have discharged the estate duty liability there is to be no further income tax or surtax payable on them.

It may be objected by my hon. Friend that this proposal is administratively untidy, and I know that this is an argument which very much commends itself to the Estate Duty Office. But there are respectable precedents for administrative untidiness. There is the special treatment of timber and the special treatment of works of art of national importance.

I commend the Clause as being in the public interest, as not discouraging the grant of mineral leases, and also as a matter of equity between executors and the Estate Duty Office as to the basic duty on the payment or on the receipt of cash for the assets of sale on the payment of royalties, and not by reference to some speculative figure in anticipation of royalties which may never be paid.

Mr. Dalyell: It is a pity that the debate on the Clause did not arise at a more civilised hour, because it deals with a very interesting subject. I should have thought that there was a very strong argument for following the American pattern which is developing, whereby on every new Treasury clause or Senate amendment on this kind of subject there is an environmental impact assessment. The Americans are working this quite well, and we might do the same. It is very silly to talk in terms of financial changes without measuring the environmental impact.

Mr. More: I do not feel able to follow the hon. Member for West Lothian (Mr. Dalyell) into the environmental implications of new Clause 37 but I support what my hon. and learned Friend the Member for Dover (Mr. Peter Rees) said. First, mineral working has assumed a

new form with sometimes very much more rapid extraction than anything thought possible only a few years ago. Secondly, a curious fact which applies to deep mining increasingly contemplated for such ores as copper, tin and lead is that most of such mining ceased in this country at about the time when estate duty was introduced. We are facing a new fiscal problem.
I also commend new Clause 37 as a practical solution. There is something unreal in making a valuation of the minerals or a lease, particularly when the minerals are not being fully worked. The great point in favour of the new Clause is that it provides a practical code, and my hon. Friend the Financial Secretary might even confess that in many cases it might be beneficial to the Revenue because it offers, despite the sinister heading to the new Clause—"Separate estate", which always frightens the Estate Duty Office—a fiscal code which is based on a realistic appraisal of what is actually produced for the successor. That, as has been shown in the case of forestry, is a practical and sensible way of resolving what is in a sense a hypothetical case not known at the date of the death in question.

Mr. T. H. H. Skeet: I support new Clause 37 and I declare my interest in hard stone and other minerals. The whole of the Minerals Exploration Act, 1971, would be pointless if it were frustrated largely because of the prevalent taxation system. The granting of mining leases has become unattractive because of the fiscal disadvantages. Successors to an estate prefer to retain their flexibility to use the mineral resources to their own advantage. They might find it more encouraging if something were done in the fiscal system to render it more satisfactory.
The mineral lease, if it is to be granted over a number of years—say, 10 to 15—cannot be sold because the mineral operator has the advantage of it and has the terms he requires. In such cases it is very difficult for an assessment to be made of the value of the minerals lying under the ground—and for another reason, that until drilling begins the value of the minerals cannot be accurately ascertained.
Whilst it has been difficult to acquire voluntarily mineral rights, it has been found extremely difficult to acquire them by process in the courts. The Mines (Working Facilities and Support) Act, 1966, has proved to have many drawbacks; it has been applicable to only a few minerals, the conditions attached to it have been stringent and the machinery cumbersome and slow. The machinery of notation under the Town and Country Planning Act has also proved unsuitable. I compliment right hon. Members opposite on the provision in the Finance Act, 1970, which dealt with the incomes side but it should now be extended to estate duty. We still have rethinking to do on this issue.
There are several ways in which it can be done. I should like to see the payment of capital tax out of royalties and on royalties as and when they emerge. It would be far too great a burden to be placed on the lessor if the result is that the mine will be worked for 40 or 50 years but a lump sum is required well in advance. A suitable precedent for this may be derived from Section 40 of the 1968 Finance Act, where it is made possible for the mining lease levy—under that much-maligned Land Commission Act—whereby betterment levy was payable in a lump sum, or alternatively it could be done out of the future royalties as they arose. That is one way. Another way is by the abatement, viz., 45 per cent., in respect of agricultural land which has now been extended in this Bill to production herds of livestock and through Bolton to the fixed assets of manufacturing companies. This principle could be extended to minerals.
Perhaps the most applicable way is that suggested by the Clause where a flat rate duty of 30 per cent. is imposed. Will the Minister bear in mind that in the mosaic of legislation brought forward partly to stimulate the extraction of non-ferrous metals it would be pointless trying to spend about £50 million if it is rendered checkmate by the fiscal system which makes it impossible for mineral operators to bring minerals to the surface. I hope, if my hon. Friend is not prepared to accept the Amendment, that he will say that in his review he will do something to solve the problem thrown up by history.

Mr. Nott: I should declare a constituency interest in this subject in the sense that I have in my constituency one of the only two working tin mines in the country. The other is just over the boundary. I am completely surrounded by mineral working land and I own some land which I believe has minerals beneath it so I declare a personal interest too.
My hon. and learned Friend the Member for Dover (Mr. Peter Rees) has raised a wide question on mining generally and we will take the points he made fully into account. The Government recognise that the pattern of mineral extraction has been changing recently. In the past, when mineral workings were less extensive and estates tended to be larger, such workings were often confined to part of a single estate and this meant that the problems over estate duty loomed much smaller. Nowadays mineral developments are becoming larger, particularly in my part of the country. They are booming in a way in which they have not been booming for a long time and at the same time estates tend to be smaller.
In many cases minerals belonging to one estate can be worked only over an area larger than the estate. I recognise the point about the disincentive element in the signing of new leases. It is true that this can exist in certain cases. The fact that the return from a mining lease is uncertain in amount and timing is a matter which should be taken into account in the valuation for estate duty purposes. If the lease were sold to the operating company immediately after the death in an arm's length transaction the Inland Revenue would accept the selling price as the proper valuation. If my hon. Friends would like to give specific examples, on a confidential basis or in some other way, of when there has been a deterrent or where the Estate Duty Office may have placed an unrealistic value upon a mining lease, we will look at them carefully. It is, however, my understanding that the larger mining companies tend more and more to enter into options to explore rather than into leases.

12.45 a.m.

The proposals made in the new Clause are fairly fundamental in nature concerning the basis of the assessment of estate


duty. I am sure my hon. Friends will realise that they would involve a substantial departure from the principles under which estate duty is presently levied. As I told my hon. Friends on an earner new Clause, we are reluctant to see a further extension of the categories of property which enjoy a special privileged form of estate duty taxation in the context of the wider review now being carried out under the Green Paper. This is the same point as I made on the earlier Clause concerning the 45 per cent. relief on agricultural land.

I can, however, assure my hon. Friends that the points they have made tonight have been noted by the Government and will be taken into account when the Green Paper is discussed further; but we would not at present find it appropriate to accept the Clause.

Mr. Peter Rees: I must confess that I am a little discouraged by my hon. Friend's reply, because at the end of the day his arguments amount to the fact that our proposal was administratively untidy. He did not actually say that it would open the door or that a coach and horses would be driven through the Bill, but it is the well-worn metaphor of untidiness that finally sways him.
Of course, it is often possible to sell the land or rights to a mineral operating company, which is probably often the only purchaser in the field. But because it is the only purchaser it inevitably pays a depressed price. In commercial terms, therefore, that is not a practical solution.
I am a little discouraged by my hon. Friend's approach but I take heart from his suggestion that he may look at the matter again when reviewing the whole subject of estate duty. On that basis, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

Mr. Barber: As my right hon. Friend the Minister of Agriculture, Fisheries and Food is to reply to tonight's Adjournment debate, I beg to move,
That further consideration of the Bill, as amended, be now adjourned.

Question put and agreed to.

Bill, as amended in the Committee and in the Standing Committee, to be further considered this day.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Stradling Thomas.]

DEEP SEA FISHING (HUMBER)

12.47 p.m.

Mr. James Johnson (Kingston-upon-Hull, West): In raising the question of the deep-sea fishing fleet on the Humber, I must begin with pleasure in thanking the Minister of Agriculture, Fisheries and Food for his personal appearance at this early hour of the morning. The right hon. Gentleman also is a Member for a fishing port and no man could be better suited or better equipped to answer any questions I may put. He will not answer all of them, I am sure, but I know that the fault will not be his own.
The right hon. Gentleman, knows, as I do, that there is a shabby myth on BBC television that Hull is a fishing village, but the official figures of the Humberside feasibility study indicate that direct and indirect employment engendered by the commercial port of Hull is about 18,000 and that engendered by the fish dock is about 10,000, including 3,000 in the deep-sea fleet. Hence the Minister will appreciate with me the jeopardy in which we are placed by the possible impact of changed Icelandic fishing limits. Examination of the numbers engaged in ancillary industries such as food processing shows that about 30,000 people gain a living upon or behind the fishing fleet. This is 15 per cent. of the labour force on Humberside.
Ten years ago, as parliamentary candidate, I visited the fish dock for the first time. Even then there was foreboding about the future of deep-sea fishing. I was asked even then, 10 years ago, to consider a conference on this matter. But the Government of the day studied the matter and gave assistance, and since the shocking disasters of 1968 we have had some good years during which much money has been made. Associated Fisheries is making record profits. No White Fish Authority subsidy was paid last year, as I understand it, which means that fleet profits must be over £8 million. The value of British landings is over £80 million.
But two things are consistent in all these years. The size of the fleet has fallen. The total catch has fallen, although the money value is up. In all our ports the nature of the fleet is changing. With Government assistance we have moved into the scrap-and-build era. We now build more modern vessels, stern-fishers, costing over £1 million. They will go much further. They are much safer and much more efficient. But they are freezers, and the cod and haddock they bring back goes immediately to cold storage. The old conventional side-fishers, the so-called wet-fishers whose catch was landed on the quayside for daily auctions, are diminishing.
Skippers tell me that in Hull in the last 11 years about 78 side-fishers have gone out of service. But more will be scrapped if we are barred from Icelandic waters. All this obviously means that fewer fishermen are catching fish, fewer merchants are auctioning wet fish and there are fewer bobbers, or dockers, to unload the fish. So unemployment is with us or coming around.
Ten years ago there were 600 bobbers. There are now 300. Ten years ago there were 300 merchants. There are now 135. I accept inevitable change, but all this will be aggravated or worsened if the Icelandic dispute is not successfully terminated.
If Norway and Denmark do not join the European Economic Community that will have an important bearing. They are having plebiscites in the autumn and if entry to the EEC is turned down it is possible that either Government could follow the Icelandic Government's bad example and extend their limits.
I do not wish to say much about the Icelandic dispute, about which the Minister is fully conversant. I thank the Minister for his recent visit to Hull and for talking to the industry. He was most forthcoming about the danger to all our fleets. We claim, like the Minister whom we support in this, that Iceland is in breach of the existing agreement. But Iceland will not go to the International Court. Talks begin tomorrow in Reykjavik. Can the Minister cast some light on the situation? Are there any developments about the matter of which areas inside the 50-mile limit we are negotiating about? I gather that some areas Iceland

would bar to herself and ourselves, and other areas are for fishing, but I understand that there are other more debatable areas.
There was guarded optimism after the visit last month of two Icelandic Ministers, Mr. Augusts son and Mr.Joseffsson, but today this optimism in Hull sounds like whistling in the teeth of a north-east gale. We are much more sceptical now. Unless given a solution before September, we cannot feel happy about future imployment for our workers, future fish prices for housewives and future incentives inside the industry.
The tables are damning. In the percentage of almost 1 million tons of fish caught on Icelandic banks, Iceland catches about 650,000 tons. We catch over 130,000 tons, and the West Germans catch just under 120,000 tons. There is no doubt that if our vessels were excluded, we should have an aceleration of the scrapping of a large part of the distant water fleet. This would adversely affect cash flow and slow down the building of new freezer vessels. In Hull we have 66 side trawlers. There is a serious possibility that over 50 per cent. would be scrapped. The Icelanders are ordering about 27 new stern-fishers from Japanese yards of between 500 and 1,000 tons, which does not make much sense in view of their arguments that they wish to conserve the fishing stocks inside the 50-mile limit.
The Minister came to Hull last Monday and I compliment him on his visit. But may I ask him why he did not see union leaders—such men as David Shenton of the Transport and General Workers'Union—who went with Jack Jones to Iceland some time ago? I understand that when they came back they were very helpful to the Foreign Office in giving their views about the situation. I do not know whether the Minister saw skippers such as Skipper Tom Nielsen and his guild. If we do fish after 1st September, these men will be exposed to danger. These men need protection and they are the men whose views are useful to the Minister. I suggest that it would have been a good thing if he had seen these men besides seeing the vessel owners of the BTF.
In connection with this matter of protection for our men, I am getting the most woolly answers when I talk to the Foreign Office. I get a succession of


double and treble negatives—such as "We will not think of not defending them in no circumstances". Could the Minister say something about this?
I now turn to the matter of a base for our fishing fleet. The British Transport Docks Board for some months has been holding a sword of Damocles over the future of the commercial docks in West Hull—the William Wright Dock and the Albert Dock. They have twice postponed the closing date. True, these docks have been losing money, but so have all the docks in Hull, both the east side and the western commercial. On 6th July the Hull Daily Mail carried a statement given by the Docks Board, to the effect that Hull fishing vessel owners put forward firm proposals in this matter of using the two western docks, Albert and William Wright, for fish. The Minister may have seen the Hull Daily Mail report, and it is categorical. Therefore, will he say something about the future base here?
We know that the Government have earmarked money, and this, along with the Dock Board's 40 per cent., may provide about £1 million for enhancing and improving the amenities and facilities in order to make this commercial dock into a first-class fishing dock. The people in Hull would like to hear the Minister's views on this matter.
The Minister was good enough to keep me informed about the working party which was set up to deal with this matter. After soundings in the constituency I believe that all the parties concerned—the vessel owners, merchants and unions—think that it would be a good thing to move next door out of the old dilapidated St. Andrew's Dock into this modern dock further towards the mouth of the Hull. Of course, it would be necessary to have increased charges, but I believe the industry could bear those charges, particularly in these boom years. People are making money in fishing these days, and both the owners and the merchants could bear a little more of their share.
May I say in parenthesis that our sister port on the south bank at Grimsby is also having anxiety about the future. Many of our firms interlock in these two ports. There is a danger of a continuing and even accelerating decline in their distant water fleet. We are now building these bigger and more expensive freezers

and factory vessels, and it is suggested that they will be based in Hull. What basis is there for this suggestion? It means that if more fish are landed in Hull there will be more ancillary activities in food processing by such firms as Birds Eye and others, although, of course the Humber bridge will be a new factor here.
The Minister may know already that landing costs are lower in Hull—39p per kit, I understand. Naturally the charges in Hull would increase if we gave the merchants and vessel owners better facilities and amenities in our more modern dock which we hope will be established.
The proposal to move our fleet next door would obviously involve resiting the fish processing plant, packing plant and the like, and it would give us more hygienic conditions, and more efficient landing, handling and auctioning of catches.
I hope that the Minister will be able to tell us something about all this, and what would be the extent of the aid which we may be given. Is the idea of £1 million which I mentioned authentic? What are the Minister's powers under the Fisheries Act, 1955? I believe that money may be given under that Act for any works which are needed for the efficient functioning of the harbour.
We believe in Hull, if we get on with it, the opportunity is there to transform these western docks into one of the most modern efficient complexes in Western Europe, standing up to Cuxhaven and any other Continental port in competition with us. But it needs substantial investment, and, of course, we must get the Icelandic dispute out of the way before we start. There may be snags in the project, but so far we have not been able to see any which cannot be overcome.
I turn for a moment to the question of dock labour. My own union, the National Union of General and Municipal Workers, has a closed shop in the St. Andrews Dock. I take it that these bobbers would move into the new dock along with the vessel owners and merchants. I think that there is a special regulation or order made in about 1942, when the late Ernest Bevin was Minister of Labour, under which the vessel


owners employ the bobbers or dock labour; it is not the usual practice as in the transport docks. So perhaps there is something to be settled there.
Also, if the Docks Board were to carry on what it is now doing, that is, ceasing, or attempting to cease, commercial landings in the Albert Dock, this might lead to some labour difficulty. I hope not. I hope that we can reach a sort of modus vivendi whereby we move our deep sea fleet in and we still continue at the Albert Dock end with commercial cargoes and commercial activities. This has to be considered in relation to our proposed entry into the EEC. If we join the EEC, we shall expect more commercial vessels coming into the West Dock at Hull. This would give us better working conditions in the old dilapidated St. Andrew's Dock.
I shall not take time now on the question of conditions at sea. Holland Martin has firmly laid down the rules for the welfare and safety of the men. I mention merely the need for a mother ship. Most emphatically, the fleet needs a purpose-built vessel similar to what the Continental fleets have, for instance, the Portugese, the Germans, and others. The "Miranda" is a converted vessel. It is a first-class job, but it is not a purpose-built ship. Such a ship might cost £2½ million or £3 million. But is it not worth it, when one considers the Arctic working conditions, the intense cold, the long weeks of darkness? Is it not worth while for the sake of safety? It is a matter of national concern, and I suggest that the cost of the new vessel should be borne on the national purse, particularly since the State has in the last 10 years given about £75 million to £80 million in aid to the industry.
To sum up, I again emphasise the need for protection for our men if they fish after 1st September inside the proposed 50 miles limit. I also emphasise the need to get the dispute settled. If we do not and our boats have to leave those waters, it will mean a loss of perhaps up to £20 million for the balance of payments. The price of fish will rise for the housewife and the near water fleet will be severely damaged. I cannot visualise those vessels coming back and fishing in the North Sea. If they do, there will be over-fishing there. I hope that the Minister will answer my questions.

1.6 a.m.

The Minister of Agriculture, Fisheries and Food (Mr. James Prior): I am grateful to the hon. Member for Kingston upon Hull, West (Mr. James Johnson) for the spirit and manner in which he raised the subject of this short debate. If I cannot answer all the questions he put to me I shall write to him about any I miss, but I hope to cover most of them. He stressed quite rightly the importance of the fishing industry to Hull and to the Humber generally and I endorse all his remarks in that respect. I am fully aware of its importance, not just from the point of view of the number of fishermen employed in Hull but also of the numbers employed as bobbers or as merchants or lorry drivers, or in the processing industry, and all those connected with supplying the fleet.
I know that both they and their families, highly dependent upon the fishing industry as they are, are anxious about the negotiations now proceeding in Iceland. Before referring to Iceland, I would point out that 1970–71 was a good year for the fishing industry. I think that 1971–72 has also proved extremely good and the prospects for this year would be very good also were it not for the problems of Iceland which are hanging over the industry at the moment.
In the composition of the fleet there are now 30 freezers operating in the two ports—24 at Hull and six at Grimsby. Of the vessels building or likely to be started and intended for the Humber, there are some 12 freezers but only one fresher. They are all intended for Hull, so there is a prospect of a considerable addition to the Hull fleet. Of the number of the wet fishers at Hull, which the hon. Gentleman estimated at 66, and which I understand is 69, three quarters are pre-1960. That shows that the wet fishers are not being replaced but more and more freezers are coming in.
On the Icelandic situation, my hon. Friend the Minister of State is at the moment in Iceland with my noble Friend the Minister of State for Foreign and Commonwealth Affairs and the next round of talks is to begin tomorrow. I sincerely hope that they will be brought to a satisfactory conclusion. The hon. Gentleman did right to point out that we need to maintain our rights off Iceland


for two reasons. The first is the importance of these grounds in themselves. Up to half our distant water catch comes from Icelandic waters and the hon. Gentleman has already stressed the importance of that catch to his port.
Moreover, a dangerous precedent would be set if we did not reach a satisfactory agreement. We fish across most of the North Atlantic and off the coasts of many nations. Some of those nations have ambitions for wider limits, and all of them want some means of preventing over-fishing by vessels diverted from Iceland. If one nation successfully defies international laws, others will feel less strongly bound by them. The fact that we would have access to wider limits set by any EEC countries would be likely to be a poor consolation.
The future of the distant water fishing is of vital importance to us. I am more than grateful for the support which the hon. Gentleman and his hon. Friends have given to the Government in our negotiations so far. The points the hon. Gentleman raised, together with the fact that any curtailment by Iceland could have a serious effect in the North Sea and even on our in-shore fishing, have not gone unheeded by myself or the Government. There are no fresh developments yet but the talks begin tomorrow.
The hon. Gentleman is right about his reference to closed areas. I have always said that we should be prepared to accept closed areas on a non-discriminatory basis. We have offered the Icelandic Government special areas for line fishing and fixed gear etc., and this they know all about. The catch from Iceland over the last 10 years has averaged 185,000 tons although it was rather more than that last year. That is the basis on which we are prepared to accept a catch limitation and the basis which I put forward at the talks held in Moscow in December by the North East Atlantic Fisheries Convention.
When I went to Hull recently—I am grateful for what the hon. Gentleman said about my visit—I did not go to see the leaders of the fishing industry at Hull. I went to Hull to see the British Trawlers Federation and the Scottish Trawlers Federation because that was the most convenient place to gather everybody

together at short notice. I did not on that occasion see the union leaders although I thought seriously whether I should do so. At that time my hon. Friend the Minister of State had seen Mr. Jones of the Transport and General Workers' Union only a short time before, and, as my time was limited, I thought I should concentrate on the British Trawlers Federation and the Scottish Trawlers Federation on that occasion. Certainly I made it plain in the interviews which I gave that I had the interests of the whole industry, including the skippers and the mates as well as the fishermen, fully at heart in what we were trying to do.
The hon. Gentleman mentioned next the problems of a transfer from the St. Andrew's Dock into the Albert and William Wright Docks. This is a matter which the industry must sort out for itself together with the British Transport Docks Board. It is bound up with the increased grant of 60 per cent. which we have made available for improvement of the ports. No fixed sum has been made available. The hon. Gentleman talked about £1 million perhaps being earmarked. There is no question of a specific amount. We shall look at the proposals for each port as they come forward. The hon. Gentleman knows that the proposals must reach me within a year, and that work must start within 18 months so that we get a move on.
I hope that the industry will agree a satisfactory move with the British Transport Docks Board and that Grimsby will get on quickly and agree what work should be carried out. There is need for a good deal of work to be done at Grimsby for deep sea vessels and for the North Sea seiners. At Hull I hope that there will be a common mind on the question of moving and that, if there are difficulties such as those which the hon. Gentleman envisages, they can be ironed out as quickly as possible.
It is not my job to intervene or to create discussions between the various sections of the industry. It must be in the interests of the whole industry, whether bobbers, merchants or trawler owners, to get together to seek a satisfactory solution to the problems which will arise if there is to be a move from one dock to the other.

Mr. Johnson: Can the Minister confirm that the Board has made a statement to the effect that the vessel owners have made firm proposals to go to Commercial Dock? Has that been finalised?

Mr. Prior: My information is that the Docks Board has been having consultations with the representatives of the fishing industry at Grimsby and Hull and that the chairman met them locally. I believe that there is to be a further discussion in the near future between the BTF and the British Transport Docks Board. That will involve all the fishing ports, not just the Humber ports. The

negotiations are proceeding actively. The sooner they are brought to a successful conclusion the better we shall all like it.
The hon. Gentleman raised the problem of the "Miranda"—when I say the problem of the "Miranda"—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speakeradjourned the House without Question put, pursuant to the Standing Order.

Adjourned at seventeen minutes past One o'clock